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Cities have been one of the most important areas of CO 2 emissions. It is increasingly important to research the effect of urbanization on CO 2 emissions, especially in large emerging and developing economies, due to the indispensable need for understanding the effect of urbanization on CO 2 emissions, evaluating carbon reduction tasks and providing the scientific basis for low-carbon urbanization. Utilizing a balanced panel dataset in the Yangtze River Delta (YRD), China, during the period of 2000–2010, this paper employed data envelopment analysis (DEA) window analysis and a spatial lag panel Tobit model to investigate the effect of urbanization on CO 2 emissions efficiency (the ratio of the target CO 2 emissions to the actual CO 2 emissions). The results show that the average CO 2 emissions efficiency was 0.959 in 2010, and CO 2 emissions efficiency ranged from 0.816 to 1 and exhibited spatial clustering in the region. The larger potential of CO 2 emissions reduction appeared in Zhenjiang and Yangzhou, indicating that more CO 2 emissions reduction tasks should be allocated to these two cities. Urbanization has negative effects on improving CO 2 emissions efficiency, and there is a U-curve relation between CO 2 emissions efficiency and urbanization, indicating that CO 2 emissions efficiency decreases at the early stage of urbanization, then increases when urbanization reach a high level. There is spatial spillover effect among the prefecture-level cities, suggesting that different prefecture-level governments should coordinate with each other to improve CO 2 emissions efficiency in the whole area. Gross domestic product (GDP) per capita also plays a markedly positive role in improving CO 2 emissions efficiency. This research highlights the effect of urbanization on CO 2 emissions efficiency and the importance of improving CO 2 emissions efficiency in developing countries. [ABSTRACT FROM AUTHOR]