In the era of the digital economy, where digitization permeates all sectors of society, digital transformation in agriculture stands as a crucial solution for addressing the growing challenges in agricultural production. Amid the competition to enhance the resilience of sustainable food systems, China sets an exemplary model with its achievements in digital agricultural transformation, providing a blueprint for developing countries in Asia and the Pacific. Primarily based on statistical data and typical case studies, this paper presents analytical findings on how digital transformation of agriculture enhances the adoption of green agricultural practices and promotes inclusive development in China. In light of the intricate challenges faced by China’s food system, the adoption of digitization emerges to facilitate the transformation from conventional agriculture to smart and sustainable practices. The pathways by which digital transformation of agriculture have the potential to address the over-application of chemical fertilizer and irrigation water, mitigation of carbon emissions, and the challenge of climate change and contribute to environmental sustainability of agriculture have been discussed. The implementation of digital transformation in sustainable agriculture—which enhances green practices and social inclusiveness by promoting digital literacy, reducing workload, creating job opportunities for low-skilled labor, and developing rural inclusive finance—has been completely explored. The challenges in digital transformation of agriculture are explained in this paper, which also provides evidence-based policy recommendations for its sustainable development applicable to developing countries.