Urbanization is a process in which the population is concentrated in cities and towns and thus promotes the development of cities and towns. The process of urbanization has brought about changes in rural social and economic structure, culture and values in China. These changes have a profound impact on the management status, development path, and inheritance form of wood carving. Traditional wood carving is mainly plane relief, which can be divided into thin relief, shallow relief, deep relief, high relief, multi-layer overlapping, double-sided hollow carving, sawn hollow carving, full ground carving, color wood inlaid carving, round wood relief, etc. From the farming era to the modern society, the business model of wood carving has changed from household system, factory system, and studio system. From the perspective of inheritance mechanism, the key elements of wood carving inheritance are cultural factors, industry background and family environment; the impact of urbanization on traditional wood carving is mainly reflected in the inheritance object, production mode, sales market, product attributes, and so on. Under the background of new urbanization, and innovation and entrepreneurship, this paper discusses the protection and inheritance of traditional wood carving technology, and at the same time, it should use its core value as local resources to shape and promote the sustainable development of rural society. This study also will provide important information for the innovation and entrepreneurship reform of related forestry majors.