Abstract: At present, China’s dairy farming industry is in the critical stage of upgrading from traditional farming to modern farming. The development of a supporting productive service industry is the key driving force for the development of the current dairy farming industry. Based on China’s 2010—2018 provincial panel data, the scale and level of resource endowments were included in the spatial weight matrix, and Moran’s I was used to verify and analyze the spatial auto correlation of the upgrading of dairy farming industry. The spatial econometric model was used to empirically study the spatial spillover effect of the agglomeration of producer services on the upgrade of dairy farming. The results showed that the productive service industry can provide effective support for the dairy farming industry to break through the resource and environmental constraints; the agglomeration of China’s dairy farming industry fluctuated and showed a significant spatial correlation; at the national level, the agglomeration of the producer service had a significant spatial spillover effect on the upgrading of dairy farming industry. The impact of the producer service industry on the upgrading of dairy cattle breeding is not limited to the local area, but also plays a role in neighboring areas; and the level of agglomeration of animal husbandry, human capital, economic development and information technology have an significant positive promoting impact on upgrading of dairy farming industry. Therefore, it is suggested to improve the supply capacity of producer services, expand the function of producer sevices, and expand the influence boundary of spillover effect, so as to promote the upgrading of dairy farming industry.