Through constructing a theoretical model of digital finance affecting urban residents’ consumption, this paper proposes three mechanisms of the influence of digital finance on urban residents’ consumption. Based on the Peking University Digital Financial Inclusion Index and panel data from 170 cities in China, a Spatial Dubin Model (SDM) under the nested matrix of geographic and economic distance is constructed to examine the above mechanisms. The findings are: (1)The high level of digital finance development exerts significant promoting effect on the consumption of urban residents in the sample city, yet brings also certain negative impacts in the neighboring cities. (2) The three major mechanisms of digital finance affecting urban residents’ consumption（urban residents’ income, financial service coverage, and payment convenience respectively）proposed by the theoretical model have all passed empirical tests, and the transmission process of the three mechanisms is accompanied by obvious spatial spillover effects.The research results offer important references for the digital finance advancement and empirical evidences for promoting residents’ consumption.