Abstract: Based on the analysis of the current character and the central problem of shandong provinceś urbanization since the reform and open policy, the author thinks that the urbanization of shandong province must achieve the transformation from the intramural development to extensive development as soon as possible in order to realize the sustainable development under the guidance of the thought of scientific development. The author points out that urban industry and urban function is the core in promoting the process of urbanization. Meanwhile, the author gives many strategies for promoting them, such as changing the rural industrialization to urban industrialization, improving the quality of the urbanization through the linkage of industry and service, stepping out the reform of the relative regime and planning the region as a whole.