Abstract: Based on the dynamic panel data of rural labour transfer and urban-rural income gap in 12 provinces in the western region from 2008 to 2022, this paper used the DIF-GMM model to analyse the impact of rural labour transfer on the urban-rural income gap, and explored the role of rural labour transfer in solving the problem of unbalanced development. The results showed that, the scale of labour transfer, the development of non-agricultural industries and financial support had a widening effect on the urban-rural income gap, while the development of transport infrastructure and GDP per capita had a narrowing effect. Therefore, in order to narrow the urban-rural income gap in the western region, efforts should be made to implement measures to promote coordinated urban-rural development by increasing investment in education and training for farmers, optimising the industrial structure, and strengthening the construction of transport infrastructure.