Transient electromagnetic Method (TEM) is an efficient geophysical detection technology suitable for detection of urban near-surface space. However, its detection results are well affected by the low resistance anomaly, which interferes with the interpretation of the inversion results. This article used finite element method to simulate the entire process of urban underground pipeline under TEM detection. The causes of interference and the degree of interference under different working conditions were analyzed. The results demonstrate that low resistance anomaly in magnetic field will caused electromagnetic energy absorption and resulting eddy current losses, which lead to a distortion of the primary magnetic field in the vicinity of the pipeline, and formation of a weak field zone beneath the pipeline. The size and shape of the shielding zone are affected by burial depth, transmitter coil diameter, and anomaly size. When the burial depth exceeds 10 times the diameter of the coil or pipeline, the shielding range stabilizes at 1.5–2 times the pipeline’s transverse diameter. Moreover, when the pipeline’s transverse diameter exceeds twice the transmitter coil diameter, the weak field zone beneath the pipeline will transform into a strong field zone, this is due to the refractive and reflective effects of the electromagnetic field. Finally, experiments were conducted and the inverted results was found to be larger than the actual pipeline diameter, with an error margin similar to that explained by the simulation. These results have implications for high accuracy detecting underground pipelines in urban areas.