As the core entity of China’s private economy, how family firms maintain strategic continuity is key to establishing long-term competitive advantages and addressing transformation challenges. However, existing research has not yet fully uncovered the internal mechanisms by which strategic continuity is affected in the context of intergenerational succession in family firms. Based on the psychological ownership theory, this paper constructs a theoretical framework to explore the impact of intergenerational succession on strategic continuity. Through the development motivations of self-efficacy and influence, possession of space, and self-identity, it explains how these factors shape managers’ psychological ownership, thereby dynamically affecting the relationship between succession and strategic continuity. Empirical results indicate that intergenerational succession significantly reduces strategic continuity, and the performance expectation gap intensifies this effect. In contrast, corporate reputation and clan culture mitigate it. This paper not only deepens the understanding of the micro-level mechanisms of strategic decision-making during family firm succession from the perspective of psychological ownership, but also provides important practical insights for improving governance efficiency and achieving sustainable development of family firms in critical stages of intergenerational succession.