Based on the practical needs of improving the quality and efficiency of government governance, this paper selects panel data of 30 provinces, autonomous regions and municipalities in China from 2007 to 2019, using DEA efficiency measurement method and constructing Tobit spatial Durbin model to test the impact of local government competition on governance efficiency. The results show that the governance efficiency of most provinces has not reached the efficiency frontier, and there is still room for improvement. Local efficiency improvement can bring positive spillover effect to surrounding areas. Inter-governmental competition has an inverted u-shaped influence on governance efficiency and spillover, and preventing the inhibition effect of inter-governmental competition on governance efficiency is the focus of government governance in the future. Among them, the legal environment has a negative moderating effect, and the better the environment, the more gentle the inverted u-shaped curve, which is more conducive to stimulate efficiency improvement and spillover. Further heterogeneity analysis shows that in the regions with high degree of government intervention and low degree of factor market development, although the inverted u-shaped effect of government competition on governance efficiency remains unchanged, the spillover effect becomes insignificant.