The Yangtze River Economic Belt is an important inland river economic belt in China, and the development of extensive economy has formed the severe situation of "heavy chemical industry encircling the river" for many years, and the industrial upgrading is imminent. At the same time, the problem of urban spread with the appearance of rapid urbanization is gradually exposed, the urban spread makes the urban space expands rapidly, and the industrial space layout also changes. Whether urban spread can promote industrial upgrading is a question worth exploring. Firstly, this paper explains the internal mechanism of urban sprawl affecting industrial upgrading by using the theory of central periphery, agglomeration economy and division of labor and cooperation, and constructs the indexes of urban spread by using urban night lighting data. Based on the panel data of 104 cities in the Yangtze River Economic Belt from 2004 to 2013, the study shows that the urban spread and the industrial upgrading of the Yangtze River Economic Belt show a "U-shaped" relationship, that is, in the short term, the urban spread significantly restricts the industrial upgrading of the Yangtze River Economic Belt. In the long run, driven by the effect of scale economy and division of labor and cooperation, urban spread plays an important role in promoting the industrial upgrading of the Yangtze River Economic Belt. The influence of urban spread on the rationalization of industrial structure is positive first and then negative, there is an inverted "U-shaped" relationship between the two, and the influence of urban spread on the upgrading of industrial structure is negative first and then positive, and there is a "U-shaped" relationship between the two. The robustness test of other characterization methods of upgrading further shows that there is a "U-shaped" relationship between urban spread and industrial upgrading. Finally, this paper proposes some policy suggestions to promote industrial upgrading from the perspective of optimizing industrial layout, improving the quality of human capital, technological innovation and so on.