<p>In evolutionary economic geography, a theoretical and empirical framework for the study of regional industry dynamics has been constructed from a supply-side perspective, while the role of demand-side factors is neglected. This study attempts to introduce a demand-side perspective into the study of regional industry dynamics by exploring the impact of market potential, a regional demand-side characteristic, on regional industry dynamics. Based on Chinese urban data, it is found that market potential has a positive effect on the entry of new industries. And the new industries attracted by market potential have weaker relatedness to existing local industries, which promotes the path breaking of regional industrial evolution. Market potential enables path breaking in the evolution of regional industries through two mechanisms: first, it increases regional income, which in turn changes the demand structure to attract more path-breaking industries; second, it raises regional productivity, which enables manufacturers and consumers to engage in more innovation to create new evolutionary paths. The findings of this paper have implications for developing countries and regions in breaking out of the lock-in of the low-end path of the industry.</p>