[Purpose] Centering on the traditional handicraft art of Shanghai puppet show, this study systematically combs its development track from the rise and fall of Ming and Qing Dynasties, modern transformation to contemporary innovation, and analyzes its dual characteristic system constructed under the background of multicultural blending, which has both regional cultural gene "sea nature"and modern innovation kinetic energy "innovation nature". [Method] Through the analysis of performance form, theme content and technical innovation, the inherent logic of realizing traditional and modern dialogue in puppet making, narrative expression and performance interaction is explored. [Result] Facing the key problems such as talent shortage, fierce market competition, drama quality and inheritance and innovation contradiction, this study further form an all-round development strategy covering education, promotion, industrial synergy and technological empowerment. [Conclusion] It provides a more practical value transformation path for the living inheritance of intangible cultural heritage art, and to assist the sustainable development of traditional skills in contemporary cultural ecology.