Rural digitalization not only constitutes the strategic orientation of rural revitalization but also serves as a potent means for augmenting farmers’ income. This study regards the implementation of China’s digital village pilot policy as a quasi-natural experiment. Based on the panel data of Chinese counties spanning from 2017 to 2022, it employs a multi-period difference-in-differences model to investigate the influence of rural digitalization on the coordinated development of urban and rural areas from the perspective of the income gap. The findings indicate that the policy has significantly reduced the urban–rural income gap. Mechanism analysis reveals that this reduction is achieved through enhancing county innovation capacity, accelerating agricultural digitization, promoting advanced industrial structure, and expanding non-farm employment. Heterogeneity analyses reveal that the policy has a greater impact in regions with less robust digital infrastructure, higher levels of community service, and stronger financial development. Consequently, it is indispensable to enhance the digital literacy of farmers, accelerate the digitalization of agriculture and the upgrading of industrial institutions, promote the balanced development of digital villages in various regions, and fully exert the guiding and facilitating role of community service levels.