Micro, Small, and Medium Enterprises (MSMEs) play a strategic role in supporting regional economic growth; however, many household-based MSMEs continue to face challenges such as limited branding capabilities, inadequate digital marketing skills, lack of product innovation, and low levels of digital literacy. These constraints hinder their ability to grow and compete in the digital economy era. This Community Service Program (PKM) aimed to develop a creative economy-based mentoring model involving Generation Z to support the upgrading of household MSMEs in South Sumatra. The program employed a Participatory Action Research (PAR) approach with a collaborative and participatory method involving MSME owners and Generation Z as creative mentors. The activities consisted of needs assessment, creative economy training, digital marketing assistance, and evaluation through pre-test and post-test assessments. The results demonstrated significant improvements in participants’ knowledge and skills across several dimensions. The average score for understanding the creative economy increased from 52 to 85, branding and product packaging from 48 to 84, digital marketing from 50 to 88, and collaboration with Generation Z from 55 to 90. The involvement of Generation Z contributed positively to digital knowledge transfer, creative content development, marketplace optimization, and adaptation to market trends. The mentoring model successfully enhanced business capacity, strengthened brand identity, expanded digital market access, and improved MSMEs’ readiness to scale up. These findings indicate that intergenerational collaboration integrating creative economy principles and digital transformation can serve as an effective strategy to improve the competitiveness and sustainability of household MSMEs in South Sumatra.