Abstract The study examines the relationship between urbanization and environment degradation while controlling for political environment in 38 African countries over the period 1970–2011. Using panel cointegration and causality analyses, we find that urbanization, environmental degradation (CO2 emissions) and political economy variables (democracy and bureaucratic quality) are cointegrated. Second, democracy and bureaucratic quality are effective in reducing environmental degradation in the long-run. Third, there are positive bi-directional relationships between CO2 emissions and affluence and population as shown by panel vector autoregressive and impulse response functions. However, a negative uni-directional relationship runs from CO2 emissions to bureaucratic quality. These results suggest that political economy variables are important in explaining the relationship between urbanization and environmental degradation.