Based on the VAR model, with the time series data of the Nation and Chongqing from 1987 to 2007, this paper empirically conducts the researches into the influence of financial development on urban-rural income gap. The results indicate that although the relationship of financial development and urban-rural income gap between Chongqing and the Nation has subtle differences, they have strong consistency, and there is a positive correlation between financial development and urban-rural income gap, which is consistent with Kuznets "the inverted U type " curve while there is a negative correlation between financial development scale and urban-rural income gap. The financial development is of active significance to narrowing urban-rural income gap, especially, the rural finance development plays a direct role in narrowing urban-rural income gap. Thus, Chongqing should actively propel regional financial development, deepen rural financial reform and raise financial agency efficiency.