Based on the data of 2015 China Household Finance Survey (CHFS), this paper applies the intermediary effect model to identify the intermediate transmission mechanism in which farmland transfers affect agricultural production efficiency. The results show that the output value of households that have transferred farmland is increased by about 27% more than those that have not. In addition, the transfer of farmland has a more significant impact on the agricultural production efficiency of young and middle –aged families. The transfer of farmland from grain production areas has an increased tendency to household output value. The mechanism analysis shows that the transfer of farmland affects agricultural production efficiency in the following two ways. On the one hand, the transfer of farmland can help realize the effective replacement of labor by machinery, increase the mechanization degree of agricultural production, and realize the scale effect of farmland. On the other hand, based on the maximization of their own interests, farmers prefer to plant cash crops and improve agricultural production efficiency through the selection effect. By comparing the above two effects, we found that the planting selection behavior of compacting grain and expanding economic growth is more prominent. Therefore, this article proposes to promote the development of the farmland transfer market and make use of scale advantage. Meanwhile, the self-selection behavior of transferred farmers in planting crops should be valued and young people with advanced concepts to engage in agricultural production activities should be introduced, which inject “fresh blood” into agricultural modernization. However, we should also keep the red line of farmland and alert the phenomenon of “non-agricultural” and “non-grain” in the transfer of farmland.