Administrative division adjustment serves as a vital policy tool for reshaping the power-responsibility relationships among local governments, exerting an increasingly profound and extensive impact on eliminating administrative barriers and optimizing the allocation of resource factors among districts and counties. Based on the samples of counties (cities) implementing the county-to-district reform from 2011 to 2021, the PSM-DID model was adopted to empirically examine the impact of this policy on the allocation of resource factors among districts and counties. The results indicate that during the study period, the degree of misallocation of capital, labor force and overall resource factors presented an upward trend. The county-to-district reform has significantly improved the level of resource factor allocation among districts and counties, and such an effect is more manifested as a short-term one. Further heterogeneity analysis reveals that the policy effect is more prominent in eastern regions as well as in cities with higher market accessibility and larger population size. In addition, compared with partial county-to-district adjustment, the policy effect of full-scale county-to-district adjustment is more pronounced. Mechanism analysis demonstrates that the county-to-district reform effectively reduces transportation costs, weakens administrative barriers, and improves the market and institutional environment by expanding transportation networks, restraining vicious competition among governments, and promoting the rationalization of public services, thereby guiding the rational flow of resource factors and facilitating the optimal allocation of resource factors among districts and counties. On the basis of the above conclusions, to maximize the policy dividends of the county-to-district reform, future reforms should focus on institutional integration, targeted policies, long-term guarantees and district-wide promotion, so as to systematically break down barriers to factor flow and achieve regional coordination and high-quality development.