<p>Investigating the residents’ stock market participation behavior holds paramount importance in enhancing their welfare and ensuring the stable progression of financial markets. This study employs a range of econometrics model to meticulously analyze the impact of natural disasters on stock market participation in urban China. The findings underscore a notable decline in residents’ inclination to take part in the stock market when exposed to natural disasters. Stringent robustness tests corroborate the dampening effect of natural hazards on urban residents’ stock market participation. Furthermore, heterogeneity analysis reveals that the adverse impact of natural disasters on stock market participation is more pronounced among individuals with higher levels of education and older age groups. Mechanism analysis suggests that the effect of natural hazards on residents’ stock market participation may be mediated through reductions in income and deteriorations in mental health. The insights gleaned from this research offer valuable policy implications, facilitating governmental efforts to bolster the propensity of disaster-affected residents to participate in the stock market.</p>