The work aims to explore the new methods and transformation paths of Ku Shulan's color paste paper cuttings in Xunyi, Shaanxi Province in modern cultural and creative design, and explore the new idea of artificial intelligence generating images to assist the design of cultural and creative products from the perspective of intangible cultural heritage inheritance and reuse. Firstly, according to Saussure's semiotic theory, the extension forms of composition symbols, pattern symbols, color symbols and the connotation of symbols in Ku Shulan's paper cutting works were analyzed. Secondly, the K-means clustering algorithm was used to extract the color symbols in Ku Shulan's paper cutting works, build a color network model, and select the color scheme for cultural creative design. Thirdly, the average value of aesthetic satisfaction of other symbols except color was calculated by using Likert scale, and the typical symbols applied in subsequent design were selected in combination with the visual form of creative deduction and reorganization of design symbols. Finally, with the new reconstructed image as a reference map, artificial intelligence generated content (AIGC) tools were applied to assist the creation of Ku Shulan's paper cutting theme cultural products. Ku Shulan's paper cutting symbol map and color network model were constructed, the most representative paper cut symbols were selected and artificial intelligence software was used to generate new images that met the modern aesthetic. In conclusion, the feasibility and effectiveness of Ku shulan's paper cutting symbol extraction and deduction method based on semiotics and K-means algorithm are verified. At the same time, the adoption of AIGC improves the efficiency of cultural and creative design, which is a new model of man-machine collaboration.