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This article aims to evaluate the impact of urbanization and different urbanization modes on cultivated land changes using an econometric model that incorporates socio-economic and policy factors in the eastern China, which experience the great urbanization in recent years. Based on land-use remote sensing data interpreted from Landsat Thematic Mapper/Enhanced Thematic Mapper digital images of Chinese Academy of Sciences and a unique set of socio-economic data, an econometric model is developed to empirically estimate the impacts on cultivated land changes. Although urbanization has an effect on the changes of cultivated land, its effect is marginal. Moreover, the expansion of built-up areas in different urbanization modes causes varying impacts on changes in cultivated land use in different regions. Assuming that other factors remain constant, compared with the expansion of villages or the development of small towns, in the periods of 1995–2000, the urbanization in the more developed eastern region alleviates the loss of cultivated land by 7%, while during 2000–2008 the rapid urbanization lead to the cultivated land loss increase by 29.2%. The policies designed to protect cultivated land by encouraging people move to small towns may actually accelerate the occupation of cultivated land.