Abstract With the data from 1978 to 2008, the authors made an empirical analysis of the impact of foreign trade and trade merchandise structure on urban-rural income gap in our country. The results indicate that the effect of the aggregate foreign trade, import and export on urban-rural income gap shows an "inverted U shape", which fits the Kuznets Hypothesis. Now the relationship between the aggregate foreign trade, import and export and urban-rural income gap shows a positive correlation before the inflection point; considering the direct and indirect impacts, the effect of optimizing export structure on narrowing the urban-rural income gap is less than the effect of optimizing import structure on widening urban-rural income gap; the total effect of optimizing the import and export structure is shown as widening urban-rural income gap. So China should keep developing foreign trade, expand foreign trade scale, and optimize export structure in order to narrow the urban-rural income gap through foreign trade.