Abstract: Based on X-12, Johansen cointegration test and FiniteLag Distribution Model, this paper analyzes fluctuation characteristics, dynamic changes and correlation effects of mutton price. The paper finds that the seasonal fluctuating mutton prices has risen since 2005, and in 2015 the cointegrated industry entered a new stage, price of beef, chicken, corn, soybean meal, wheat bran and CPI affect mutton price significantly. To promote the development of the sheep industry, the paper suggests that number stability of sheep herds and the basic income of farmers be ensured, investment on technological innovation be increased, supervision of the feed industry be strengthened, sheep slaughtering and processing enterprises acquisitions be regulated, development of sheep slaughtering and grading standards be accelerated.