Abstract: On the basis of the analysis of technological innovation mechanism, thirty-one provinces’ data are analyzed by statistical method in China. It can be testified that technological innovation is positively correlated with market demand. Meanwhile market demand is the major source of technological innovation in macroscopic level. Due to the divergence of area in China, the areas are divided into east area, middle area and west area according to market demand influence of technological innovation. Each area should take appropriate measures to advance technological innovation by improving market mechanism.