Abstract: Based on the theory ofUnitRoot Test and Co-integration Test, this paper analyzes the time serial data in Gansu from 1990 to 2008 through co-integration test, impulse response function and variance decomposition, and sets up the error correction model between urbanization and tertiary industry to reveal the dynamic equilibrium relationship.The results show that the long-term dynamic equilibrium relationship exists between the level of urbanization and the value-added of the tertiary industry per capita.The short-term changes of urbanization level are in the same direction with the per capita added; the long-term added value per capita has greater positive impact on urbanization level than the vice versa.