<p>The dynamic process of urban growth and shrinkage is a key dimension for evaluating spatial resource allocation efficiency. Structural imbalances in resource distribution drive spatial differentiation in patterns of growth and shrinkage. Using 2005–2020 remote sensing raster data, this study constructs a growth-shrinkage matrix and uses Shanghai as a case to reveal the characteristics and mechanisms of urban spatial evolution. The results indicate: (1) Growth and shrinkage coexist, with the central area characterized by “intensive growth and localized shrinkage” and peripheral areas by “expansive growth and localized shrinkage”.(2) Economic vitality remains highly concentrated in the central urban areas, while the new towns have yet to develop effective growth poles and synergistic corridors. (3) The interplay between market mechanisms and government regulation determines the differentiation of spatial types in urban growth and shrinkage. Extensive growth is driven by the alignment of land expansion with market-driven capital and labor flows, while intensive growth is characterized by the efficient utilization of existing land resources and the strategic optimization of resource allocation. (4) Extensive shrinkage reflects a misalignment between policy-driven expansion and market realities, whereas intensive shrinkage underscores the vulnerability of urban systems to external shocks and the resultant depletion of critical growth factors. This study offers a theoretical basis for improving urban governance and resource efficiency.</p>