New urbanization is meaningful to promote shared prosperity for all. Using the framework of sustainable livelihood analysis, this paper examines the impact of new urbanization construction on the sustainable livelihood development of rural resident’s by combining the policy implement of national new urbanization pilot projects and China Health and Retirement Longitudinal Study (CHARLS). Non-parametric regression shows that there is a multiple dynamics equilibrium in the livelihood assets-income of rural resident in the pilot areas, with equilibrium levels higher than those in non-pilot areas. Based on the quasi-natural experiment of new urbanization pilot projects, the average treatment effect of new urbanization policy on the livelihoods of rural resident in pilot areas was identified using the multi-period DID method. The results of the study found that new urbanization pilots significantly improved the livelihood assets-income of rural households. Through the synergy effect of integration, matching and accommodation, the resource allocation mechanism of production factor flow was strengthened. This not only increased the total factor productivity and output value of agriculture but also facilitated the non-agricultural livelihood transformation of rural resident, contributing to the sustainable development of rural livelihoods.The research conclusions of this paper offer micro-level evidence supporting the new urbanization and all-around rural revitalization.