The rapid pace of urbanization in recent years, accompanied by the tension between urbanization and environmental pollution as well as public health, has become increasingly prominent, potentially constraining the normal pace of urbanization development, environmental sustainability and public health enhancement. This paper aims to clarify the relationship between new urbanization, environmental pollution and public health from both local and spatial perspectives, using a spatial Durbin model and a mediating effects model based on panel data from 275 prefecture-level cities in China from 2011 to 2020 and to test the existence of regional heterogeneity with a sub-sample of three major regions: eastern, central and western China. After incorporating environmental pollution as a variable across the entire scope of China, it was found that the new-type urbanization was related to public health in a ‘positive U-shaped’ form in terms of both local and spatial spillover effects (β2 = 14.5620, β3 = −17.8938, p < 0.05; θ2 = 19.2527, θ3 = −29.0973, p < 0.1) and environmental pollution exerts a negative impact on public health (β1 = 6.3704, θ1 = 2.5731, p < 0.05). A “reverse U-shaped” local effect was observed between new-type urbanization and environmental pollution (β2 = 0.6281, β3 = −0.5315, p < 0.05). Environmental pollution plays a partially mediating role in the impact mechanism of new-type urbanization on public health. There was regional heterogeneity in the relationship between new-type urbanization, environmental pollution and public health. The empirical results for the western regions and the whole of China were generally consistent, but the differences were significant between the eastern and central regions. In the eastern region, new-type urbanization and public health were related in an ‘inverted U-shaped’ form from the perspective of local and spatial spillover effect, and in the central region, there was an ‘inverted U-shaped’ form from the perspective of local effect. There was a threshold effect relationship between new-type urbanization and environmental pollution and between new-type urbanization and public health. At the same time, there was regional heterogeneity in the relationships between the three. Therefore, this paper argues that governments should formulate scientific urban planning and sustainable development policies that take into account the actual situation of each region and aim to promote sustainable urbanization, environmental quality and public health as a whole.