Theoretically,this paper analyzes the impact mechanism of urban-rural income gap on economic growth in China. And using the panel data of China's 30 provinces from 2000 to 2008,it studies empirically the influence mechanism of urban-rural income gap on economic growth in China through the accumulation of physical and human capital by the system GMM. The result shows that the negative effect of widening of urban-rural income gap on economic development in China through restraining the accumulation of human capital outweighs the positive effect of it through promoting the accumulation of physical capital. Therefore,the widening of urban-rural income gap in China generally hinders economic development. Finally,it puts forward some recommendations so as to narrow the urban-rural income gap and push the economic growth.