As the basic spatial unit of China's economy with complete economic functions and independent operation, counties play a crucial role in the economic development system. Currently, most county-level economies in China are still at a relatively low level, facing multiple constraints such as heavy reliance on traditional industries and agriculture, and inadequate digital infrastructure. Upgrading county-level industries is an important driving force for achieving high-quality economic development. The vigorous development of digital technology brings new opportunities for county-level development. In this background, it is important to explore whether digital rural development will impact the upgrading of county-level industries, through which channels it will influence, and whether these effects will vary due to different levels of county-level economic development. The answers to these questions hold significant theoretical and practical implications. However, research on the relationship between digital village construction and county-level industrial structure upgrading has not yet reached a consensus, due to differences in variable measurement indicators, sample observation periods, and theoretical foundations. We match the county-level digital rural index data jointly released by the Peking University's Institute of New Rural Development and Alibaba Research Institute with relevant data in the county level in China. It ultimately obtains panel data covering 1094 counties (cities) in China from 2018 to 2020. By employing a panel fixed-effects model, it empirically investigates the overall effect of the level of digital rural development on industrial structure and further discusses the mechanisms and heterogeneity effects. The empirical results show that, from the perspective of the entire sample, digital village construction significantly promotes the upgrading and transformation of industrial structure. Even after conducting various robustness tests such as endogeneity issues, replacement of explanatory variable and dependent variables, and excluding special samples, this result keeps the same as the baseline. In terms of the mechanism, digital village construction promotes the upgrading of county-level industrial structure by enhancing residents' entrepreneurial activities and income. Heterogeneity analysis indicates that the positive effect of digital rural development on industrial upgrading is more pronounced in the northeast and central regions of China. Based on the above results, the article proposes several policy recommendations, including promoting the level of digital construction and application in county-level areas, strengthening the cultivation of digital literacy among county residents, stimulating the employment-promoting effects of digital village construction, and leveraging the advantages of digital technology in underdeveloped economic regions. The main contribution of this article lies in the use of the county-level digital rural index to measure the level of digital construction at the county level scientifically and intuitively. By exploring the relationship between digital rural development and industrial upgrading at a finer scale of counties, it enriches existing research and provides guidance for the government to accelerate digital transformation in counties and realize rural revitalization and common prosperity.