Abstract: The urban-rural income gap is an important observation point of common prosperity, and studying the spatial and temporal evolution of the urban-rural income gap and its influence mechanism can help to better understand the path and realization mechanism of common prosperity. Based on the panel data of 11 prefecture-level cities in Zhejiang Province from 2012 to 2023, this paper first measured and analyzed the spatio-temporal evolution of the urban-rural income gap by using the Thiel index, and then constructed a nonlinear regression model to study the impact mechanism of the urban-rural income gap. The study showed that, the urban-rural income gap was decreasing both vertically and horizontally; the urban-rural income gap was mainly affected by the degree of agglomeration of the agricultural industry, and the latter’ s influence on the former showed a “U” shape of decreasing and then increasing; the level of economic development and the productivity of agricultural labor acted as the mediator variables, explaining the impact of the degree of agglomeration of the agricultural industry on the urban-rural income gap; and the level of economic development and agricultural labor productivity acted as the mediator variables. The level of economic development and agricultural labor productivity acted as intermediary variables to explain the intermediate transmission process of agricultural industry agglomeration affecting urban-rural income gap; the heterogeneity analysis showed that, agricultural industry agglomeration played a more significant role in narrowing the urban-rural income gap in eastern Zhejiang, central Zhejiang and southwestern Zhejiang, whereas the marginal impact of the agglomeration saturation effect was weakened in the northern part of Zhejiang. Accordingly, the future should establish dynamic monitoring and threshold warning mechanism to avoid the negative externalities brought by excessive industrial agglomeration. At the same time, it should implement differentiated regional regulation, accelerate the promotion of agricultural mechanization and smart technology, and set up a fund for urban-rural industrial collaboration to enhance the resilience of the rural economy, so as to narrow the income gap between urban and rural areas.