Abstract According to the comprehensive theoretical analysis framework of new economic geography and economic growth model, and by using spatial econometric and threshold effect model, this paper analyzes the relationship of institutional arrangement, urbanization and environmental pollution, which is on the basis of Chinese Provincial Panel Data from 1998 to 2015. The empirical results show that there are inverted N-shaped curves in the National, Eastern and Western, and there is U-shaped curve in the Central. The estimation coefficient of interaction term is significantly negative of property rights institution, market institution, economic opening and the environment institution. The distribution pattern is significantly positive, which makes the vertices advanced of inverted N and U curves. There are significant interval effects on the impact of urbanization on environmental pollution under different institutional arrangements. When the institutional arrangement is low, the improvement of urbanization will aggravate the environmental pollution. When the institutional arrangements are gradually improved, the intensification of urbanization on environmental pollution will gradually weaken. At the same time, labor, capital, environmental investment and technical level all influence the environmental pollution in different aspects. Therefore, it is an effective way to promote the coordinated development of urbanization and ecological environment through the improvement and innovation of the institutional and the promotion of regional environmental cooperation.