This paper focuses on the iron smelting industry from the Han Dynasty to the Wei, Jin, and Southern and Northern dynasties, uses modern industrial theories to highlight the process of the development of the iron smelting industry, summarizes the characteristics of the transformation of production mode, and analyzes the impact of the transformation of production mode on the change of state governance. In ancient times, China’s iron smelting industry chose the technical path of pig iron smelting and casting. Based on the mature and developed pig iron smelting and casting technology, it shifted to a production mode based on steel forging from the late Eastern Han Dynasty to the Wei, Jin, and Southern and Northern dynasties. The transformation caused changes like decentralization and localization in state governance at three levels: central government policies, iron smelting production organization, and the behaviors of grassroots individuals and social communities.