Using the data from 2002 to 2012, this paper analyzes the effect of human capital heterogeneity and knowledge spillover on industrial structure upgrading at provincial level and regional level. Conclusions are as follows. At provincial level, human capital heterogeneity and knowledge spillover measured by industrial agglomeration significantly improve industrial structure upgrading, knowledge spillover measured by R&D stock and technology market turnover restrains industrial structure upgrading, but the combination of R&D stock and human capital is conducive to industrial structure upgrading. At regional level, there exists regional difference in the effect of human capital heterogeneity and knowledge spillover on industrial structure upgrading. Human capital heterogeneity is advantageous to the East, which is not conducive to the Middle, but is not significant in the West. Knowledge spillover measured by R&D stock restrains the East and improves the Middle. Knowledge spillover measured by industrial agglomeration significantly restrains the Middle, and the effect on the East and West are not significant. Knowledge spillover measured by technology market turnover blocks the West.