Abstract: There are significant differences in the impact of financial development on the upgrading of industrial structure in different dimensions. based on the multi-sector endogenous growth model and the revised AK model, this paper constructs the mathematical model embedding the nonlinear influence mechanism of financial development to explore the mechanism of financial development on the upgrading of industrial structure firstly. Secondly, In the perspective of functional evolution, from the two dimensions of financial scale and financial efficiency and combining with panel data of 30 provinces in China from 2004 to 2016, the paper uses the Panel smooth transition regression model (PSTR) to test the nonlinear continuous influence relationship of financial development on industrial structure upgrading. The empirical results found that:(1) There is a clear first-increment and post-reduction relationship between the financial scale and the upgrading of industrial structure, and the improvement of financial efficiency has a positive impact on the upgrading of industrial structure;(2) There are significant regional differences in the impact of financial scale and financial efficiency on industrial structure. The financial scale and financial efficiency of the western region have a promoting effect on the upgrading of industrial structure; The relationship between the financial scale and the industrial structure in the central region is characterized by first suppression and promotion, and the promotion effect of financial efficiency is not obvious; The excessive expansion of the financial scale in the eastern region has restrained the optimization of industrial structure to a certain extent, and improving financial efficiency has become an important means to break through the bottleneck of the financial scale and promote the upgrading of industrial structure.