Abstract: 　　Industrial structure differentiation is the result of the division of social production, while market fragmentation and local protection are important factors in hindering the industrial structure differentiation. With a case study on China's 29 provinces panel data from 2001 to 2010, this paper introduces a method to measure local protection, tests the relationship between market fragmentation and differentiated industrial structure, local protection and differentiated industrial structure practically and studies their evolutionary trend and the factors that affect the regional industrial structure. On the whole, the level of inter-regional differences in industrial structure grows steadily, for the domestic market fragmentation is further converged and local protection doesn’t benefit regional industrial structure differentiation. In other words, the greater the difference between regional economic development is, the greater the difference between industrial structures is. Therefore, we should form a unified domestic market as soon as possible, establish a scientific performance evaluation system of local government officials, and formulate industrial policies to improve the regional industrial layout.