The upgrading of the consumption structure of rural residents holds significant importance for expanding domestic demand and enhancing the endogenous driving force and reliability of the domestic circulation.Based on provincial panel data from 2000 to 2019，this paper utilizes the theories of constant relative risk aversion utility function and Maslow’s hierarchy of needs to examine the impact of transfer income on the upgrading of rural residents’ consumption structure and its underlying mechanism.Furthermore，it analyzes the role of transfer income in narrowing the gap in consumption structure upgrading.The results show that for every 1% increase in transfer income，the proportion of rural residents’ development-and-enjoyment-oriented consumption in total consumption will increase by 2.6%.Moreover，as rural residents’ disposable income rises，the impact of transfer income on upgrading their consumption structure will gradually diminish.Transfer income promotes the upgrading of consumption structure mainly through the channels of reducing the share of household consumption expenditure on food，increasing the share of consumption expenditure on education，culture and recreation，and increasing the share of expenditure on health care and medical services.Moreover，transfer income helps to reduce the disparity in the degree of upgrading of consumption structure upgrading among rural residents with different income levels and in different regions，particularly benefiting those with low to medium incomes and those residing in the central and western regions.Therefore， this article proposes policy recommendations such as implementing differentiated transfer payment policies，strengthening support measures for vulnerable groups，and expanding the supply of rural residents’ consumption to promote the upgrading of their consumption structure.