Labor migration will affect the spatial allocation of labor supply and lead to industrial structural change. Generally, the industrial structural change includes upgrading and rationalization. This paper uses provincial dynamic panel data from 2002 to 2005 to analyze the effect of labor migration on the manufacturing structure upgrading and rationalization. The empirical results show that labor migration will enhance the manufacturing structural rationalization, but will deteriorate the upgrading. Only in the region with larger scale FDI and higher human capital accumulation, labor migration could have positive effect on manufacturing structural upgrading. FDI, human capital accumulation and marketization all could enhance the positive effect of labor migration on manufacturing structural rationalization. The results of this paper provides a new vision for optimizing industrial structure, developing advanced manufacturing and realizing high-quality development in the future.