This paper selected the household income grouping data of China's urban and rural areas, respectively, calculated the urban and rural poverty lines with the ELES method, calculated the FGT index with the POVCAL software of the world bank, and constructed the VAR model to make an empirical analysis of the mechanism between industrial structure upgrading and the effect of urban and rural poverty reduction. The results show that the upgrading of industrial structure has a significant effect on poverty reduction in urban areas, but has little effect on poverty reduction in rural areas. Therefore, in the process of formulating and implementing poverty reduction policies in China in the future, we should pay attention to the differences between towns and rural areas and constantly improve the national poverty reduction governance system.