This paper studies how acquiring digital firms affects the post-acquisition innovation performance of traditional firms. Based on the longitudinal dataset of Chinese listed firms from 2007 to 2017, our findings show that digital technology-related acquisitions have a positive effect on a firm's innovation performance. Furthermore, we propose a contingency model to investigate the moderating effect of unabsorbed slack and internal digital investment. The results indicate that the acquirer's unabsorbed slack has a partially positive moderating effect on the relationship between digital technology-related acquisitions and innovation performance. Meanwhile, the acquirer’s internal digital investment negatively moderates this relationship, but its negative moderating effect would be weakened by the unabsorbed slack. Our paper expands the contingency perspective within a traditional firm's digital transformation and has implications for future research and management practices.