["Review of Development Economics, EarlyView. ", "\nABSTRACT\nWhile agricultural mechanization is vital for productivity, the “smallholder dilemma” in developing countries often creates prohibitive barriers to technology adoption. We identify rural e‐commerce as a novel institutional catalyst that alleviates these constraints. Using a staggered DID framework applied to county‐level panel data and household‐level surveys in China, we demonstrate that the expansion of digital trade significantly enhances agricultural mechanization levels. Beyond a simple sales‐channel effect, we uncover a “factor reallocation” mechanism by reducing transaction costs: e‐commerce incentivizes land transfer and fosters the emergence of a “sharing economy” in agricultural machinery through cross‐regional service markets. Notably, the policy acts as an equalizer, generating higher marginal benefits in administratively smaller counties and low‐grain‐output regions. By demonstrating how digital infrastructure can resolve the indivisibility of capital in fragmented agrarian systems, this study provides a new theoretical and empirical link between the digital economy and structural agricultural transformation.\n"]