The impact of urban and rural income distribution on total consumption is influenced by urbanization level. Through setting up the model of total consumption influenced by urban and rural income distribution and by considering population factor, by analyzing the ratio of China’s rural residents income to total income and the relationship between urbanization rate and total consumption, the results indicate that the enlargement of ratio of China’s rural residents income and the urbanization is conducive to expand the consumption of the residents but is not helpful to urban and rural income distribution adjustment when urbanization rate surpasses a certain level. Thus, based on the condition of big gap between urban and rural inhabitants income and the decrease of the ratio of rural income to total income in China, the strategic choice for China to expand domestic demand is to firstly adjust income distribution structure, to increase the ratio of rural residents income and to increase wage income of rural inhabitants so as to promote total consumption level, based on this, to further improve urbanization rate for further increasing total consumption.