Abstract In the past empirical research, there are certain controversy over the impact of urbanization on environmental performance. In order to explore the root causes of this controversy and to provide theoretical support and policy basis for green and healthy urbanization path, this paper deeply explores the impact mechanism of urbanization on environmental performance and summarizes two major impact paths. First, urbanization has a positive impact on environmental performance by reducing energy intensity. Second, urbanization has a positive impact on environmental performance by promoting green innovation. Taking as undesired outputs the sulfur dioxide emissions (SO2), chemical oxygen demand (COD), and solid waste emissions, the paper then further calculates environmental performance using the SBM model. China’s provincial penal data is then adopted along with the mediation effect model in an empirical test of these two theoretical mechanisms, which confirms their existence. In view of these empirical results and China’s reality, in order to improve China’s environmental performance, this paper believes that the green performance improvement strategy should be implemented according to local conditions, and it should be insisted that the urbanization of both people and land be implemented at the same time.