Against the backdrop of multiple uncertainties including international economic and trade frictions, geopolitical conflicts, and external technological sanctions, building a new “dual circulation” development pattern with the domestic circulation as the mainstay is an important strategic choice to effectively prevent and defuse external risks and promote the secure and stable development of China’s economy. Existing literature mainly examines the influencing factors of the external risk exposure of industrial chains from the perspectives of digital economy development and changes in foreign capital structure, while relevant studies from the dimension of domestic economic circulation remain insufficient. To fill this research gap, this paper systematically explores the impact and mechanism of domestic circulation on the external risk exposure of industrial chains using panel data covering 17 manufacturing industries in 45 countries from 2000 to 2018. The results show that domestic circulation significantly reduces the external risk exposure of industrial chains. Heterogeneity analysis indicates that this inhibitory effect is more pronounced in the “domestic-funded dominated” and “domestic-foreign funded” types of domestic circulation, as well as in labor-intensive and technology-intensive industries, while no significant heterogeneity is observed in direct and indirect trade links. Mechanism testing reveals that domestic circulation helps strengthen domestic supply, boost domestic demand, and optimize supply-demand matching, thereby narrowing the external risk exposure of industrial chains. Further analysis points out that trade network deepening and digital technology innovation exert “ballast stone” and “accelerator” effects respectively, further enhancing the positive role of domestic circulation in reducing the external risk exposure of industrial chains. From the perspective of “ex-ante risk control”, this paper systematically reveals the internal mechanism through which domestic circulation affects global industrial chain security, as well as the heterogeneous characteristics across different industries, enterprises, and trade types. The conclusions not only expand the research scope in the fields of the new development pattern and industrial and supply chain security, but also provide more targeted empirical evidence for industrial chain risk warning and security construction.