The emergence of youth development-oriented cities originates from the intersection of common urban development issues and specific youth development challenges in China. Urban spatial structure, whether agglomerated or dispersed, directly influences the agglomeration of young talent and the allocation efficiency of innovation factors. Based on LandScan Global Population Database from 2008 to 2022, the impact of the spatial structure of youth development-oriented cities on innovation factor misallocation was empirically analyzed. It was found that the degree of spatial dispersion in these cities lies on the left side of the “U-shaped” structure of innovation factor misallocation, with a further trend toward agglomeration. Further analysis of the dynamic flow mechanism reveals that the spatial structure alleviates innovation factor misallocation through the bidirectional flow of innovation capital and innovators, particularly with the flow of innovators benefiting surrounding cities. Static mechanism analysis indicates that the environment for innovative factor allocation optimizes resource allocation by mitigating innovation capital misallocation under the agglomeration trend in youth development-oriented cities. The research supports the adoption of reasonable spatial dispersion strategies in youth development-oriented city planning to optimize the allocation of innovation factors, and corresponding policy recommendations are proposed.