Population mobility and the expansion of construction land in industrial development promote urbanization, and the sustainable development of cities creates requirements for the green transformation of industry. This paper uses the directional distance function (DDF) and the global Malmquist–Luenberger (GML) index method—including urbanization factors—to calculate the industrial green transformation (IGT) index in China, and to analyze its evolution and spatial distribution characteristics. The results show that ignoring the urbanization factor will lead to the overestimation of the IGT. The growth of the index has multiple stages, and it shows a decreasing order in the middle, east and west regions. Overall, the distribution of the index spreads out over time, and the gap widens. In terms of spatial correlation, high values are mostly concentrated in the eastern region and low values are mostly concentrated in the western region, and the gap in the eastern region is larger than those in the central and western regions. Therefore, in addition to the transformation of industrial production into a circular economy model, it is also necessary to promote the circulation of technical talent between regions in the development of urbanization, reducing the unbalanced development between regions and comprehensively promoting the green transformation of industry.
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