Local government debt, as a government tool to boost economic development, is also a major source of industrial overcapacity. This paper analyzes how local government debt influences the formation of industrial overcapacity. Taking China's cities as the sample and, using both the Spatial Durbin Model (SDM) and the mediating effect model, the paper empirically examines the effect of local government debt on industrial overcapacity and the spatial spillover effect. It finds that local government debt exacerbates industrial overcapacity, with a significant spatial spillover effect. Moreover, the conclusion still holds after a series of robustness tests are conducted. The expansion of local government debt significantly contributes to the industrial overcapacity of the central and western regions, with a strong spatial spillover effect. However, it does not have a significant impact and spatial spillover effect on industrial overcapacity in the eastern region. […]