The development of China's service industry is inseparable from the realistic background of urbanization currently.Choosing the panel data of twenty-six provinces,autonomous regions and municipalities of China from 2005 to 2015,this paper makes an empirical study on the impact of urbanization on the development of service industry and its regional difference separately by using dynamic panel model of system GMM estimation method.The result of study shows that urbanization has a significantly positive impact on the service industry at the national level,while the promoting impact is still small; the impact of urbanization of the east,middle and west of China on the service industry are also small and significantly different at the regional level.Based on the results of empirical study,this paper puts forward relevant suggestions that accelerating the process of a new type of urbanization should be attached importance to at a strategic level for the better development of China's service industry and appropriate policies and measures to promote the development of service industry with urbanization should be formulated according to the actual situation of each region.