Based on analyzing the impact mechanism of digital technology development on the upgrading of urban industrial structure in China, the panel data of 276 cities from 2011 to 2021 were used to build a digital technology development index, and the impact of digital technology on the urban industrial structure has been empirically tested using the dual fixed effect model and the intermediary effect model. The findings are as follows. Digital technology can significantly promote the upgrading of urban industrial structure and promote the advancement of urban industrial structure. Economic efficiency is an intermediary variable that digital technology promotes the upgrading of urban industrial structure. Digital technology improves economic efficiency by reducing transaction costs, improving transaction efficiency, and deepening labor division, thereby indirectly promoting the process of urban industrial structure upgrading. The impact of digital technology on the upgrading of urban industrial structure exhibits regional heterogeneity. It plays a crucial role in driving the transition towards high-end development in relatively less developed regions, such as the Midwest. Based on this, it is recommended to strengthen the construction of digital infrastructure, focus on building a complete data element market, bridge the "digital divide" between regions, formulate industrial digitalization policies tailored to local conditions, accelerate the integration and development of digital technology and the real economy, to fully leverage the positive promotion effect of digital technology on the upgrading of urban industrial structure and promote the upgrading of urban industrial structure.