Market mechanism plays a decisive role in the allocation of resources. A unified large market can enable the free flow of goods and elements, thereby improving the efficiency of resource utilization and technological innovation, and promoting high-quality development. Local protectionism and market segmentation caused by the reform of fiscal decentralization system and the governance mode of promotion tournaments have inhibited the development of market integration and affected the promotion of regional technological innovation capability. Our government has been committed to building a domestic integrated market for many years. However, market segmentation and trade barriers between regions have always existed, which have greatly hindered the flow of factors and affected the development of scientific and technological innovation. The Yangtze River Delta region is the origin of breakthroughs in key core technologies and an important carrier of double circulation. Technological innovation is a new engine to promote the high-quality development of the Yangtze River Delta urban agglomeration. For this reason, this paper takes 27 cities in the Yangtze River Delta urban agglomeration as research samples. Firstly, the commodity market integration index, labor market integration index, capital market integration index and overall market integration index of Yangtze River Delta urban agglomeration are calculated by using relative price method, absolute deviation method and coefficient of variation method. Secondly, the multi index comprehensive evaluation system of regional innovation capability is established and the time series global principal component analysis method is used to calculate the technological innovation capability index of the Yangtze River Delta urban agglomeration. Finally, the panel threshold model is used to study the nonlinear impact of market integration and its segmentation types on regional technological innovation capability. The results are as follows:from the perspective of the Yangtze River Delta urban agglomeration as a whole, commodity market integration can promote regional technological innovation capability, but its impact does not have a threshold effect; The impact of labor market integration and capital market integration on technological innovation has a single threshold effect; However, there are some differences between static analysis and dynamic analysis in the impact of market integration on technological innovation capability. From the perspective of urban agglomeration in the province, the market integration and commodity market integration of 9 cities in Jiangsu have a single threshold effect on technological innovation capability; The labor market integration of 9 cities in Zhejiang has a single threshold effect on technological innovation; The capital market integration of 8 cities in Anhui has a single threshold effect on technological innovation capability. The paper creatively expands the connotation of market integration into the integration of commodity, labor and capital markets. The regional heterogeneity existing among the three provinces and one city of the Yangtze River Delta urban agglomeration is included in the study. The paper researches the non-linear impact of the market integration of the Yangtze River Delta urban agglomeration on technological innovation. The conclusion of the paper has important reference value and guiding significance for effectively improving the market integration level and regional technological innovation capability of the Yangtze River Delta urban agglomeration.