Abstract: Since the beginning of reform and opening up to the outside world, the mechanism of controlling the income of urban residents in China has undergone a fundamental change. The income gap is widening among residents, and to some extent, the widening gap curbs the increase of consumption and hinders a further escalation of the consumption structure of urban residents, which affects the growth of consumers' demand. At present, the domestic market demand seriously hampers the development of national economy and constrains the economic growth rate. The consumption structure of urban residents relates directly to the consumption level, consumption characteristics and the trend of consumption development and to some extent determines the variations of all kinds of consumptions. In this paper, the Panel Data model is used to analyze the influence of urban residents' income distribution on their consumption structure and we have also discussed how to deal with insufficiency of domestic demand from the distribution aspect.