Abstract: Developing rural collective economies is an effective approach to enhancing the effectiveness of rural living environment governance and promoting sustained improvements in rural environmental conditions. Drawing on Olson’s theory of collective action, this study uses data from two waves of the China Rural Revitalization Survey (CRRS) conducted in 2020 and 2022, and employs the Ordinary Least Squares (OLS) method for empirical analysis. The results indicate that the development of the rural collective economy has a significant positive effect on rural living environment governance. This finding remains robust after a series of endogeneity and robustness tests. Mechanism analysis further reveals that this positive effect mainly arises from the enhancement of collective action consciousness and the rational allocation of collective resources. Heterogeneity analysis shows that the governance-enhancing effect of rural collective economic development is more pronounced in villages with smaller population sizes, better integration of agriculture, culture, and tourism, higher levels of environmental investment, stronger emphasis on village rules and conventions, and greater environmental awareness among villagers. Accordingly, this study proposes policy recommendations centered on strengthening rural collective economies, optimizing benefit distribution mechanisms, and appropriately utilizing village rules and regulations. These findings provide practical pathways for addressing challenges in rural living environment governance and offer theoretical insights for advancing related research.