Abstract: This paper uses the entropy weight method to measure the intelligence index of China’s manufacturing industry from 2009 to 2019, and uses the fixed effect model, the threshold effect model, the system GMM and instrumental variable method to examine the impact mechanism of innovation capacity and labor costs on the level of manufacturing intelligentization. The results show that innovation capacity and labor cost both promote the intelligent transformation of manufacturing industry. The interaction between innovation capacity and the cost of medium and high-skilled labor has a significant positive effect on the improvement of the level of manufacturing intelligence, and the positive effect of the interaction with the cost of high-skilled labor has a time lag. Furthermore, regional heterogeneity shows that the increase in the cost of medium and high-skilled labor in the eastern region will enhance the intelligent transformation effect of innovation in manufacturing, while the enhancement effect of the cost of low-skilled labor is not significant. the increase in labor costs of low-, medium-, and high-skilled labor in the central region will have the above-mentioned enhancement effect, and in the western region are both not significant. The transmission mechanism in the eastern region is more intelligent technology research and development, and the transmission mechanism in the central region is both technology research and development as well as technology application, while the conduction mechanisms in the western region has not yet activated.