Carbon mitigation in the urban residential building sector is critical for China to achieve its carbon peak and carbon neutral commitment. However, how urbanization affects urban residential building carbon emissions is still unclear. This study adopts the panel threshold regression model to explore the dynamic influence mechanism of the urbanization on urban residential building CO2 emissions based on the evidence from China’s 30 provincial regions during 2000–2015. Results indicate that urbanization contributes positively to the increase of urban residential building CO2 emissions, while such degree of influence varies across different stages of income and energy structure. As for per capita income, the promoting effect of the urbanization on urban residential building CO2 emissions is enhanced with the growth of per capita income. And the degree of such increasing effect becomes greater when per capita income exceeds its threshold value. Regarding the energy mix, the driving effect of urbanization on urban residential building CO2 emissions is also strengthened when the energy mix crosses its threshold value, showing a “stepwise growth” feature. This study reveals the nonlinear influence mechanism of urbanization on urban building CO2 emissions, and this is helpful in boosting the related theoretical and practical exploration on the impact of urbanization on the environment. Based on our findings, an environmentally-friendly consumption pattern should be promoted and more penetration of cleaner energies should be improved in urban households, which will be effective to alleviate the increase of residential carbon emissions.