Increasing industrial water use efficiency is key to achieving sustainable industrial development. This study employed bootstrap-data envelopment analysis to calculate the industrial water use efficiency in 31 Chinese provinces from 2005 to 2015. The regional differences and spatial spillover effect of the industrial water efficiency of the 31 provinces were analyzed. Moreover, a spatial Tobit model was used to examine the factors that influence industrial water efficiency. The results showed that the industrial water use efficiency values of all the 31 provinces were less than 1 during the study period, which implied that industrial water use has not reached optimal status and can be further improved. The regional differences in industrial water use efficiency exhibited a U-shaped trend (convergence followed by diffusion). Provinces with high industrial water use efficiency were distributed in the eastern and coastal regions of China, whereas those with low industrial water use efficiency were concentrated in the western regions. Furthermore, regional backgrounds influenced the spatial spillover effect of industrial water efficiency. The transition probabilities of different industrial water use efficiency values varied under various regional conditions. Analysis of the influential factors indicated that the water resources per capita, amount of R&D input, and strength of environmental regulation restrain the increase of industrial water efficiency, whereas the GDP per capita, industrial structure, and amount of foreign investments promote the increase of industrial water efficiency. Accordingly, countermeasures and suggestions are proposed for increasing the industrial water use efficiency in the studied provinces and in China as a whole.