By a VAR model, granger causality test and impulse response function, this paper empirically researches into te-chnology innovation, urbanization and urban-rural income gap in China in the period from 1985 to 2009. Results show, that technology innovation and urbanization is the cause to urban-rural income gap, and the long impact responses are positive; urbanization propel the technology innovation forward, otherwise, technological innovation has no significant effect of urbanization. Finally, based on the empirical conclusions, this paper put forward to two enlightenment for narrowing urban-rural inco-me gap and co-ordination urban-rural development.