Abstract: Promoting the upgrading of the agricultural industrial structure in the digital economy era is a key to the transformation of China from a large agricultural country to a strong agricultural country. Using panel data from 261 prefecture-level cities in China from 2011 to 2020, this study empirically examines the effect of the digital economy on the upgrading of the agricultural industrial structure and its functioning mechanism using the fixed, mediation, and threshold effect models. The results show that 1) the digital economy significantly promotes the upgrading of agricultural industrial structure and has a positive effect on the rationalization and advancement of the agricultural industrial structure. The empowering effect is better in prefectures with low administrative levels and non-main grain-producing areas. 2) Digital economic development helps to promote the innovation of agricultural technology and the transfer of agricultural labor force, which significantly promotes the rationalization and advancement of the agricultural industrial structure. Compared with the innovation of agricultural technology, the labor force transfer shows a greater mediating effects on the digital economy empowerement on the upgrading of the agricultural industrial structure 3) There is a double threshold for agricultural technological innovation in the digital economy promoting the advancement of the agricultural industrial structure, and its conduction effect shows a U-shaped characteristic of decreasing first and then increasing. There is a single threshold for the agricultural labor force transfer in the digital economy promoting both the rationalization and advancement of the agricultural industrial structure, and the greater the number of transfers, the greater the conduction effect of the transfer on the rationalization and advancement of the agricultural industrial structure. This study makes several key innovations and marginal contributions: first, it enriches the research on the related fields of digital economic empowerment and empirically explores the impact effect and heterogeneity characteristics of digital economic empowerment on the upgrading of agricultural industrial structure from the perspective of rationalization and advancement, which provides the basis for the formulation of differentiated policies. Second, it reveals the mechanism of digital economic empowerment for upgrading the agricultural industrial structure, an in-depth investigation of the transmission mechanism of agricultural technological innovation and labor transfer in the process of digital economic empowerment, and explores the differences in the mechanism of digital economic empowerment when the levels of agricultural technological innovation and labor transfer are different, thus providing a new way of thinking for the promotion of upgrading the agricultural industrial structure in the context of the digital economy.