AbstractWith rapid urbanization, millions of rural villagers have become urban citizens in China. This paper estimates the effect of the in situ urbanization policy on an individual's health by employing the difference‐in‐differences framework and using panel survey data from the China Family Panel Studies. Our findings show that this program, unlike other kinds of urbanization, which have had negative impacts on mental health or made people smoke or drink more, increased people's self‐reported health status significantly. Further mechanism analysis reveals that the in situ urbanization policy affected health by increasing people's confidence in the future, their satisfaction with their current lives, and their medical insurance enrollment. This study highlights the importance of “the city comes to villagers” urbanization in China, and it can play an essential role in advancing the urbanization rate and avoiding the negative impacts of urbanization on health.