Abstract: Improving the governance capacity of rural cadres is an important practical path to promote the modernization of rural governance system and governance capacity. Based on the survey data from 675 village cadres in Yunnan Province, this paper empirically analyzed the effect and mechanism of digital literacy on the governance capacity of village cadres. The results showed that the improvement of digital literacy could significantly promote the improvement of village cadres’ governance capacity. The mechanism analysis found that digital literacy could effectively empower village cadres’ governance capacity by enhancing the ability to obtain information and enhancing the accumulation of human capital. Heterogeneity analysis showed that the differences in digital literacy among the village cadres’ group would lead to the differentiation of their governance capacity, and the effect of digital literacy on the governance capacity of village cadres with higher ability level was more significant. At the same time, digital literacy could significantly improve the policy implementation ability, digital governance capacity and industry driving ability of village cadres. Based on this, the paper puts forward some policy suggestions, such as improving the incentive and guarantee mechanism for the promotion of village cadres’ digital literacy, opening up the path of digital empowerment, and building a differentiated digital literacy cultivation system.