Abstract: Using the impulse response function, this paper analyzed the impact of urbanization on the institutional transformation of all the cities in Jiangsu Province between 2000 and 2015 by three dimensions (decentralization, marketization and globalization). Then three indices, the proportion of local governments’ fiscal decentralization, the proportion of the non-state-owned and non-state-controlled industrial gross outputs value in the total industrial value, and the ratio of total import and export value to GDP, were chosen to measure decentralization, marketization and globalization, respectively. The results showed that: ① Urbanization greatly promoted the improvement of decentralization in Jiangsu Province, especially for the north part of Jiangsu; ② Urbanization played a little role in marketization, but it showed a positive effect on marketization in the three cities , Suzhou, Wuxi and Changzhou; ③ Urbanization also exerted significant influence on globalization, and the labor force raised by rapid urbanization has brought tremendous economic benefit in the foreign trade; ④ In general, the impact of urbanization on the three dimensions of institutional transformation was more pronounced in less developed stages and less developed areas.