Abstract: Based on the unbalanced panel data of 37 listed banks in China from 2007 to 2019, this paper first theoretically analyzed the mechanism of internet finance on the profitability of traditional commercial banks, and then by establishing mediating effect models and using the fixed effect estimation combining GMM, this paper attempted to empirically analyze the correlation mechanism and influence effects from the dimensions of revenue sources and structure. The results show that: (1) On the whole, internet finance has an obvious negative impact on the profitability of China’s banking industry. (2) From the perspective of revenue source, internet finance has a significant negative impact on banks’ interest revenue and non-interest revenue, thereby reducing banks’ profitability. (3) From the perspective of revenue structure, the influence of internet finance on income structure indicators such as the proportion of non-interest revenue and revenue diversification is not yet obvious. (4) From the perspective of type, the impact of internet finance on the profitability of regional banks is significantly greater than that of large and medium-sized national banks.