Abstract Based on the data of 271 prefecture-level cities from 2006 to 2018, this paper constructs panel model and spatial Durbin model to empirically test the relationship between producer services agglomeration, labor factor allocation and regional coordinated development, and uses the adjustment path model to test the mediating effect of labor factor allocation. The findings are: The agglomeration of producer services has a nonlinear relationship with labor factor allocation and regional coordinated development,respectively; The differential characteristics of “agglomeration effect” and “diffusion effect” of producer service agglomeration in eastern, central, western and northeast regions have a heterogeneous “local-neighboring” effect on urban labor factor allocation and regional coordinated development. The agglomeration of supportive producer services with high added value has a stronger nonlinear effect on the allocation of labor factors and regional coordinated development than that of basic producer services; The labor factor allocation plays an intermediary role in the nonlinear relationship between the agglomeration of producer services and regional coordinated development. And when the producer services are highly concentrated, it is easier to reverse the mismatch performance in the labor factor allocation through the “diffusion effect”. It can strengthen the intermediary transmission path of “producer services agglomeration-labor factor allocation-regional coordinated development ”.