<p>Coordinating the relationship between new urbanization and carbon budget balance has become one of major strategic goals of China. However, literatures explore influencing mechanism between them rarely. Based on panel data of 114 prefecture-level cities in the Yellow River Basin (YRB) from 2000 to 2020, this paper clarified theoretical mechanism of impact of new urbanization on carbon budget balance. Then, dynamic panel model and intermediary effect model were utilized to explore impact and mechanism of new urbanization on carbon budget balance in multiple dimensions empirically. Main findings were as follows. First, a significant positive correlation existed between new urbanization policy and carbon budget balance. This result was still valid after endogeneity and robustness tests. Moreover, new urbanization had a significant nonlinear effect of “N-type” on carbon budget balance. Role of new urbanization in the carbon budget balance is a process of first rising, then falling, and finally rising again. In addition, new urbanization of most cities in the YRB has not crossed the second inflection point of promoting carbon budget balance. Mechanism analysis results shown that new urbanization promoted carbon budget balance by propelling four-fold mechanism of industrial structure upgrading, element agglomeration, technological innovation and economic linkage. Finally, heterogeneity results shown that under influence of urbanization dimension, city type and geographical location, impact of new urbanization on urban carbon budget balance was different.</p>