Storm surge disasters have caused devastating losses to coastal areas, making disaster prevention and mitigation capacity (DPMC) critical in promoting high-quality and sustainable economic development. In this paper, the systematic construction of a comprehensive index of storm surge disaster losses (SSDLs) and DPMC in China is described respectively. Then, panel fixed effect and threshold models are established to explore the relationship between SSDLs and economic growth, in particular, the moderating effect of DPMC. Our results reveal that, from 2006 to 2019, SSDLs exhibit an inverted N-shaped trend, with losses gradually decreasing from south to north. DPMC has been increasing but has visible spatial differences. Notably, SSDLs have a significant negative impact on economic development in China's coastal areas, however, DPMC can play an effective role in mitigating and regulating these negative shocks. With the continuous improvement of China's disaster prevention and mitigation system, SSDLs can be largely offset. Heterogeneity analysis shows that DPMC is most effective in the sample with a high SSDL, low DPMC, and in the southern marine economic circle in China. Further, the robustness tests are ensured by replacing measurement method, replacing GDP per capita with night-time lighting data, and replacing econometric models. Importantly, our study highlights the crucial non-linear role of DPMC in reducing the losses caused by storm surge disasters and promoting sustainable economic development. These findings provide valuable insights for policymakers to improve capacity building and subjectivity, regional cooperation and ensure the economic resilience of coastal areas in the face of storm surge disasters.