The results of a study of the relationship between development of service industry and advancement of urbanization in Shaanxi Province by collecting related statistic data between 1978 and 2009 through unit root test, cointegration analysis and Granger causality test show that an obvious mutually causal relationship exists between development of service industry and advancement of urbanization in Shaanxi Province. So in order to speed up urbanizing construction and development of service industry in the province, great efforts are to be made to accelerate readjustment of economic structure, construction of Xi’anXianyang economic development region and reform of the household identity system.

progress of urbanization; development of service industry; hierarchy analysis; Shaanxi’s economy