Subsidy for urban rail transit is an important foundation for the management and organization of public transport operations. Seeking optimization theories and methods for the scientific issue of urban rail transit subsidies has become an important means for the government to implement subsidy schemes and improve the management level of operators. Combining the key elements in the actual operation system of urban rail transit, this study deeply revealed the relationship among “passenger demand”, “train operation plan”, and “government subsidy schemes”. Considering the influence of the passenger travel distance, a distance-based subsidy optimization model was constructed. A heuristic solution algorithm was designed based on the characteristics of the proposed optimization model. Finally, taking Changsha Metro Line 2 as an example, the effect of distance-based subsidy scheme on the passengers ’ travel behavior and operation system performance was analyzed. The correctness and effectiveness of the optimization model and algorithm were verified. Besides, taking the fixed subsidy scheme as the comparison object, the research results are shown as follows. (1) The distance-based subsidy scheme is more applicable than the fixed subsidy scheme, which can attract more passengers, improve the operating efficiency, and significantly reduce the required subsidies. (2) There is a significant difference in the concentration of passenger demand under the two subsidy schemes. The fixed subsidy scheme attracts more passengers with short trips, while the distance-based subsidy scheme attracts more passengers with long trips. The research results can provide theoretical support and decision-making basis for the formulation and implementation of“reasonable subsidy”scheme of public transportation. © 2023, Central South University Press. All rights reserved.