["Review of Development Economics, EarlyView. ", "\nABSTRACT\nIn theory, the inability to realize the economic value of rural homesteads leads to spatial injustice, which hinders rural development and even restricts urban–rural integration development. However, it is unclear whether homestead system reform with marketization as the main line can genuinely promote urban–rural integration development. At the same time, the rise of the digital economy has shown great potential in optimizing resource allocation and promoting employment. Given this background, this article uses data from 610 counties in China from 2007 to 2021 and the China Land Economic Survey (CLES) to theoretically and empirically study the impact of homestead system reform on urban–rural integration development at the county level and its mechanism. The results show that (1) homestead system reform promotes urban–rural integration development. This positive effect is realized by promoting rural households' income and nonagricultural employment. However, homestead transfer and withdrawal play different roles. (2) The digital economy can enhance the positive impact of the homestead system reform on urban–rural integration development. This beneficial moderating effect primarily arises from the application of the digital economy in the financial sector. (3) The impact of homestead system reform on urban–rural integration development has county heterogeneity, which is likely to lead to uneven urban–rural integration development among regions. The above results are important for other countries with respect to developing homestead system reform and promoting urban–rural integration development.\n"]