Local urbanization, as an important strategic means to promote the transformation and upgrading of the manufacturing industry and regional coordinated development, not only promotes the rapid growth of the local economy, but also profoundly affects the transfer trend of the manufacturing industry. Aiming to explore the impact of local urbanization on the transfer of China’s manufacturing industry, based on the dual perspectives of output value and labor factors, an indicator system for local urbanization, manufacturing output value transfer, and labor factor transfer was constructed. The local urbanization, manufacturing output value transfer, and labor factor transfer indices of 30 provinces in China from 2013 to 2021 were measured, and the coordination between manufacturing output value and labor factor transfer was calculated. A fixed effects model was used to empirically test the impact of local urbanization on the transfer of China’s manufacturing industry. The results indicate that on-site urbanization can promote the transfer of labor factors in medium tech industries, inhibit the transfer of labor factors in high-tech industries, and have a significant inhibitory effect on the transfer of output value in different types of manufacturing industries. At the same time, on-site urbanization has a significant inhibitory effect on the coordination between output value and labor factor transfer in primary and high-tech industries.