Abstract: Based on the measurement of technical progress bias index and the degree of overcapacity in China’s industrial sectors, this paper empirically tested the impact and transmission mechanism of technical progress bias on industrial overcapacity, and explored the heterogeneity of the relationship between technical progress bias and overcapacity under the different matches of technological progress bias and factor endowments. The results show that at present the direction of technical progress is capital-biased in most China’s industries, which has a significant role in aggravating overcapacity, and the capital-biased technical progress has an impact on overcapacity mainly through investment, demand, R&D and capital allocation efficiency. Last this paper found Technical progress bias could effectively improve production efficiency and resolve overcapacity under technical suitability, but it would further increase overcapacity under technical unsuitability.