The effective classification of urban domestic waste is the key to achieve a "waste-free city" and provides an essential guarantee for resource utilization. This article takes a coalitional game perspective to study the dilemmas in urban domestic waste separation from the cooperative interaction of residents, government, and enterprises. The study finds that urban domestic waste classification in China is currently facing many problems, focusing on: 1) insufficient consensus among residents, 2) shortage of input funds, 3) corporate profitability difficulties, 4) weak policy constraints, and 5) difficulties in integrating goals. In this regard, each participating body still needs to focus on collective interests, coalitional games, break the dilemma society, and promote the long-term management of urban domestic waste.