This paper analyzes Chinese marketization process since the reform and opening up, and it outlines the logic chain of the impacts of marketization on human capital externality.Through adopting the survey data of urban household in Chinese Household Income Project Survey (CHIP2013)and panel data of Chinese provinces from 1997 to 2014, this paper gives empirical evidences for the impacts of marketization on human capital externality from the micro level and micro level.On a micro level, human capital externality is greatly constrained by the level of marketization, since human capital wage premium of cities with high level of marketization is higher than that of cities with low level of marketization.On a macro level, the threshold effect based on marketization level exists in the external influence of human capital in provinces on total factor productivity in regions.When the marketization index is higher than 5.62, the technology spillover effect of human capital will be significantly enhanced.