Abstract: Agricultural mechanization is an important part of modern agricultural rural construction in China. The impact of agricultural mechanization on the agricultural regional economy is analyzed to provide reference value for future agricultural economic development. China’s inter-provincial panel data from 2010 to 2021 are selected to test the influence mechanism of agricultural mechanization and rural labor force on the development of agricultural economy using the fixed effects, intermediary effects and panel threshold model. The results of the study show that, firstly, agricultural mechanization can significantly and positively promote the development of agricultural economy, and in the regional analysis, agricultural mechanization in the eastern region has the greatest impact on the agricultural economy, which is significantly higher than the national average level. Secondly, through the analysis of mediation effect, it is found that only the labor force transfer in the central region can produce mediation effect, and the labor force transfer in other regions produces masking effect. Finally, through the panel threshold model analysis, it is found that the average education level of rural residents has a threshold effect in the relationship between agricultural mechanization and the agricultural economy, and when the average education level of rural residents reaches the threshold, agricultural mechanization has a significant impact on the development of the agricultural economy. Based on this, it is necessary to continue to improve the level of agricultural mechanization in China, to further improve the agricultural mechanization service market and agricultural machinery purchase subsidy policy, to build and improve the agricultural machinery socialized service system that serves the agricultural operators’ agricultural machinery operations, and to guide the labor force transfer in accordance with the local conditions, so as to promote the sustainable development of agricultural regional economy in China.