Abstract: Zhejiang province has successfully completed the first round 27 small cities cultivate pilot work, and accumulated rich practical experience for the towns' development of new urbanization. The paper based on this background, and took the Fotang town of industrial agglomeration type for example, then analyzed the mechanism of industrial agglomeration promoting the new urbanization from attracting population, industry support, space expand and institutional innovation, then refined the development path of Fotang's new urbanization based on industrial agglomeration, in order to provide certain reference about the transformation of urbanization to the second round cultivation of small city and the common towns in other regions.