Urbanization and the third industrial development is an interactive progress. Based on this, the paper analyzes the evolvement of the third industry and population urbanization in Xinjiang from 1979 to 2005, including the relationship between population urbanization and the total yields, components, yield per person of the third industry, indicates that the third industrial development has a strong pushing to urbanization, and that urbanization rate is largely related to the third industry yield per person. Xinjiang government should enhance adjusting industrial structure, optimizing the internal structure and directing a harmonious development between urbanization and the third industry.