Urban sprawl does not invariably impede factor agglomeration; rather, it can foster polycentric urban configurations, thereby enhancing productivity and encouraging enterprise innovation. This study investigates the effect of urban sprawl on enterprise innovation using data for A-share listed Chinese companies from 2010 to 2020. The results reveal a significant inverted U-shaped relationship between urban sprawl and enterprise innovation, particularly among large enterprises, well-established entities, non-state-owned enterprises, and those operating in non-manufacturing sectors. Additionally, the effects of urban sprawl on the inverted U-shaped relationship are more pronounced in the north-eastern regions and small cities. Regional integration significantly moderates the inverted U-shaped relationship between urban sprawl and enterprise innovation. This research contributes new insights to the field of enterprise innovation, offering theoretical and empirical support for analyzing the economic implications of urban sprawl.