Using panel data from 30 provinces from 2014 to 2020 as the research sample, the study found that local government debt has a complex impact on common prosperity. Specifically, local government debt has a significant negative impact on the overall level and developmental dimension of common prosperity, while it has a significant positive impact on the shared and sustainable dimensions of common prosperity. The effectiveness of government auditing can effectively alleviate the negative impact of local government debt on the development dimension of common prosperity, and effectively enhance the positive impact of local government debt on the sharing and sustainability dimensions of common prosperity. Mechanism analysis shows that local government debt can affect the process of common prosperity by reducing regional innovation levels, increasing provincial capital stock, and enhancing marketization levels. Heterogeneity testing found that the effect of local government debt on common prosperity is more significant in samples with low levels of digital economy and inland provinces. The research conclusion can provide reference for preventing local government debt risks and promoting the goal of common prosperity.