Abstract: Extensive literature regarding studies on technological innovation and industry upgrading are available both at home and abroad,but they are discussed as two topics independently and few researches are devoted to their correlation.Although many studies on technological innovation imply the conclusion of industry upgrading and many studies on industry upgrading also imply suggestions of technological innovation,we can hardly find any study on the correlation of the two using theoretical analysis and practical examples.Having analyzed the optimized A-U model and reviewed the study methods of technological innovation and industry upgrading,this paper makes a research on the technological innovation and industry upgrading of China′s textile industry,demonstrating practical examples.Further research needed to be done on this aspect is also suggested from an economic standpoint.