Abstract: With the fast development of China’s agricultural mechanization since 1978, China’s agricultural machinery power has been enhanced remarkably, agricultural machinery structure has been improved significantly, and the machinery operation rate has been increasing continuously. As a high-efficient and labor-saving technology, agricultural mechanization enhances the grain productivity and promotes the optimization of the adjustment of input structure and crop structure, leading to the grain production concentration and expansion. At the same time, agricultural mechanization can also increase the revenue for multiple sectors involved in grain production, including both part-time and full-time grain producers, machinery investors, and service providers. Through machinery investment, new grain production entities can be cultivated and scale production can be realized due to the lock-in and sunk cost effects. Agricultural mechanization can also reduce grain production cost and improve the input efficiency to enhance the competitiveness of grain production and promote agricultural technology progress in China. The output effect, structural effect and spillover effect of agricultural mechanization have profoundly affected agricultural production and development patterns in China, meaning that supporting and subsidizing the purchase of agricultural mechanization technology and farm machinery services is an optimal path to promote agricultural transformation and agricultural modernization.