Abstract: Such factors as border areas, national minority, mountainous areas, the situation of being underdeveloped determine the characteristics of dynamic mechanism of urbanization in Yunnan. It is the industry support of montanic urbanization to develop specially advantageous industries, and to promote the industry to non-agriculturization. It is the institutional guarantee of montanic urbanization to break institutional barriers, and to promote urbanization of population . It is the inevitable choice of montanic urbanization to plan the layout of urban reasonably, and to realize land intensive arrangement. To develop a dynamic mechanism of urbanization with multiple-wheel engines, effective institutional guarantee, intensive land configuration, and to explore a path of urbanization of peasant going into the towns, towns going up the mountains, can add new motivity and energy to accelerate the urbanization process in Yunnan.