This paper analyzes the impact of transfer payments on the high-quality economic development in Xinjiang from a theoretical perspective, and uses data from 14 regions and prefectures in Xinjiang from 2013 to 2022 for empirical testing. The results show that transfer payments can directly improve the level of high-quality economic development in Xinjiang; transfer payments have an indirect negative impact on the high-quality economic development in Xinjiang by adjusting the scale and structure of fiscal expenditures, however, the indirect effect is relatively weak. Based on heterogeneity analysis, it is found that general transfer payments have a positive impact on the high-quality economic development in Xinjiang, while special transfer payments have a negative impact; transfer payments have a significant positive effect on the high-quality economic development of northern and southern Xinjiang; the impact of transfer payments on the high-quality economic development in Xinjiang varies across different dimensions. Based on this, it is necessary to quickly introduce a method for fiscal transfer payments in the autonomous region, strengthen the budget performance evaluation of transfer payment funds, accelerate the construction of a diversified local government assessment and evaluation system, based on Xinjiang’s resource endowment, and fully play the role of transfer payments in promoting high-quality economic development in Xinjiang.