How Intangible Cultural Heritage Protection Reduces Urban–Rural Income Inequality

China’s rich intangible cultural heritage (ICH) offers a unique context for examining the economic implications of cultural preservation. This study exploits the designation of National Representative ICH Items as a quasi-natural experiment and employs a difference-in-differences (DID) approach based on county-level data to assess the impact of ICH conservation on the urban–rural income gap. The results show that counties approved for the national ICH list experience, on average, a 2.4% smaller urban–rural income ratio than non-approved counties, suggesting that ICH protection contributes to narrowing income disparities. Mechanism analyses reveal that the promotion of new enterprise formation and the expansion of the service sector are key transmission channels. Heterogeneity analysis reveals that four categories of ICH items, including traditional dance, traditional music, folk art, and folk literature, and newly added ICH items exhibit more pronounced effects in reducing the urban–rural income gap. Complementary micro-level evidence demonstrates that ICH protection significantly raises rural residents’ wage, business, transfer, and property incomes, with stronger effects relative to their urban counterparts. These results highlight the potential of cultural heritage conservation as a pathway to inclusive and sustainable rural development.