Abstract: Based on the background of digital economy promoting high-quality economic development and realizing common prosperity, this paper used the panel data of 30 provinces in China from 2012 to 2020 to empirically test the impact of digital economy on urban-rural income gap, and discussed the mediating effect and threshold effect of rural industry integration between digital economy and urban-rural income gap. The results showed that, digital economy could significantly narrow the income gap between urban and rural areas, and the inhibitory effect was more prominent in the western region and the region with balanced grain production and sales. The digital economy could narrow the urban-rural income gap by enabling the integration of rural industries. The impact of digital economy on the urban-rural income gap had a single threshold effect of the level of rural industrial integration. After crossing the threshold, the marginal impact of digital economy on narrowing the urban-rural income gap showed a decreasing trend. Therefore, we should vigorously develop the digital economy, promote the integrated development of digital economy and rural industries, formulate special support policies for each region, so as to narrow the income gap between urban and rural areas and achieve common prosperity.