The upgrading of the service sector structure not only provides an internal driving force for enhancing total factor productivity, but also offers effective support for fostering new-quality productive forces. Based on the analytical framework of new structural economics, this study employs a fixed-effects model and a threshold effect model to examine the nonlinear relationships among human capital structure, service sector structure, and total factor productivity in services across different levels of economic development. The findings indicate that the upgrading of the service sector structure depends on a well-matched human capital structure; when human capital structure aligns with the service sector structure, its advancement effectively promotes further structural upgrading. Moreover, when human capital structure meets the developmental demands of the service sector and the service sector evolves based on comparative advantages in factor endowments, the upgrading of human capital structure can optimize the allocation of internal factors within the service sector and significantly enhance total factor productivity. Going forward, sustained efforts should be made to enhance human capital cultivation and improve its allocative efficiency, accelerate the optimization and internal integration of the service sector, resolve structural imbalances in resource endowments, and leverage regional coordinated development as a underpinning to drive an overall leap in the sector's total factor productivity.