Abstract:: Based on the panel data of 31 provinces in China from 2011 to 2020, this paper discusses the impact of the digital economy on the coordinated development of urban and rural areas and its internal mechanism from the theoretical and empirical levels, and uses the instrumental variable method to solve the endogeneity problem. Based on the fixed effect model, it is found that the digital economy can effectively promote the coordinated development of urban and rural areas, and the positive effect is more prominent in the eastern regions. Based on the threshold model, it is found that the impact of the digital economy on the coordinated development of urban and rural areas presents a double threshold characteristic. When the digital economy index ranks between the first two thresholds, it has the strongest promoting effect on the coordinated development of urban and rural areas. Based on the mediation effect analysis, it is found that the development of digital economy can alleviate the income gap between urban and rural residents and promote regional entrepreneurship, thereby promoting the coordinated development of urban and rural areas. Therefore, in the new development stage, we should actively promote the in-depth reform of the digital economy, pay attention to preventing and defusing potential risks while expanding the scale, and further play the positive role of the digital economy in promoting the coordinated development of urban and rural areas, in order to empower high-quality economic development.