The work aims to take the connotation of traditional shadow puppet culture as the core of creation, transform and activate the heritage of traditional shadow puppet culture, inject spiritual core into the design of traditional shadow puppet IP, explore channels for the activation of traditional shadow puppet culture IP images, find an innovative mode of promotion of traditional shadow puppet culture, develop new ideas for the inheritance and development of shadow puppet culture, and improve the publicity of shadow puppet culture, so as to provide multi-dimensional ideas for the creative transformation and innovative development of traditional shadow puppet culture. Through literature analysis and fieldwork, this paper systematically analyzed the current academic research situation and development trend of shadow puppets, sorted out the regional traditional shadow puppet visualization information, relied on the traditional shadow puppet visual metaphor to transform the core of shadow puppet culture, took the design theory as the academic support and AIGC tools as the main driving force, and finally presented the design transformation process of "theoretical design + cultural connotation + AIGC tools". It realized the combination of theoretical foundation and new technology, and applied it to shadow puppet IP image design and cultural and creative derivative practice. Focusing on the connotation of traditional shadow puppet culture, and combined with AIGC technology, this paper explored the process of shadow puppet culture IP design from blurred images to gradual clarity, to accurately convey the characteristics and spiritual connotation of shadow puppet culture, and construct a design program of "inheritance-remodeling-control-guidance", so as to provide more thinking and possibilities for the display of cultural innovation in the field of IP design. In the design process, the initial effect of the design was vague, and the characteristics of the shadow puppet characters were not accurately captured. In conclusion, based on the connotation of traditional shadow puppet culture, reconstructing the factors of traditional shadow puppet culture and combining the design and research of shadow puppet IP image with AIGC tool are conducive to improving the cultural status of traditional shadow puppets in the context of rapid development of the Internet, exploring new ways of innovation and development of traditional shadow puppet culture, and realizing the creative transformation and innovative development channels of shadow puppet culture.