To study the mechanism of augmented reality advertising. It analyzed the essence of augmented reality to demonstrate the inevitability and feasibility of augmented reality advertising. Then，it analyzed the classic application in advertising from areas of mobile advertising， online advertising and outdoor advertising. Finally， it explored the mechanism of augmented reality advertising from aspects of experience， integration， intelligence and O2O. It pointed out that augmented reality was essentially a more real and wonderful mixed reality， AR advertising works by bringing virtual-real fusion experiences，integrating into daily life，providing with intelligent solutions and accelerating the conversion of online communication to offline marketing.