Improving carbon emission performance (CEP) is the key to realizing the goal of “carbon peaking and carbon neutrality” for China. Using a panel dataset of 282 cities at prefecture level and above in China from 2003 to 2017, this study employs the Global Malmquist–Luenberger (GML) index to measure CEP. Moreover, this study investigates the effect and transmission mechanisms of urbanization on CEP based on the extended STIRPAT model. The results show a significant positive “U-shaped” relationship between urbanization and CEP. When urbanization exceeds the inflection point, urbanization is conducive to improve CEP in Chinese cities. The mechanism analysis illustrates that human capital has a positive impact on CEP, while technological innovation inhibits it. The findings of this study can provide a scientific basis for local governments to formulate different strategies to improve China’s high-quality development through human capital accumulation and low cost and scale of low-carbon technologies.