There exist significant gaps in nutritional status between urban and rural populations in China. The previous literature has shown that more knowledge and usage of nutrition labels are instrumental in improving diet quality and health. The aim of the study is to analyze: (1) Are there urban-rural disparities in consumer knowledge, use and perceived benefits of nutrition labels in China; (2) If so, what are the magnitudes of the disparities; (3) What can explain the disparities, and how can the disparities be reduced? The Oaxaca-Blinder (O-B) decomposition is utilized to analyze the predictors of urban-rural disparities in nutrition labels based on a self-conducted study of Chinese individuals. The information from a total of 1635 individuals (aged 11-81 years) across China in 2016 was collected in the survey. We find that rural respondents have less knowledge, lower usage and perceived benefits of nutrition labels than their urban counterparts. Demographics, focus on food safety, frequent shopping locations and income jointly explain 98.9% of the disparity in the knowledge of nutrition labels. Nutrition label knowledge is the predictor which contributes most to urban-rural disparity in label use-accounting for 29.6% of the disparity. Nutrition label knowledge and use are the two biggest predictors of disparities in perceived benefits-accounting for 29.7% and 22.8% of the disparity in perceived benefits, respectively. Our study suggests that policies aiming to improve income and education, as well as raising awareness of food safety in rural areas, are promising in closing the urban-rural disparities in nutrition labels knowledge, use, diet quality and health in China.