<p>Food security is a fundamental issue concerning human survival and development, and it is also an essential foundation for achieving the United Nations Sustainable Development Goal of “Zero Hunger”. This paper, set against the institutional background of the construction of well-facilitated capital farmland demonstration counties in China, examines the impact of farmland upgrading policies on grain production capacity using panel data from 2,018 counties from 2000 to 2020 and the difference-in-differences method. The study finds that the well-facilitated capital farmland construction (WFCFC) has a significant effect on increasing grain production, raising the county-level per capita grain output by approximately 4.62%. Further mechanism testing indicates that in terms of external performance, WFCFC can increase grain yield by promoting land mechanization and improving supporting water conservancy infrastructure; In terms of internal attributes, WFCFC can also achieve grain production by promoting the “grain trend” of land, cultivating new grain production and management entities, and improving agrarian society services. Finally, the heterogeneity test shows that after the central government strengthened the overall management of farmland in 2018, the grain production increase effect of WFCFC is more obvious in hilly terrain and Underdevelopment. Therefore, high-standard farmland construction should shift from a primary focus on “new expansion” to a balanced approach that combines new construction with the renovation of existing farmland. Greater investment should be directed toward hilly and less-developed areas, with strengthened supporting infrastructure—especially irrigation and drainage systems, as well as on-farm power distribution—while encouraging new types of agricultural business entities to participate more deeply in post-construction maintenance and management, to continuously enhance grain production capacity and strengthen food security.</p>