The 21st century witnessed unprecedented development in Chinese cities and rapid urbanization has exerted substantial effects on regional environmental and climate change. While increased precipitation and temperature extremes have been widely observed under urbanization, whether increasing urbanization enhances or mitigates drought evolution is still unknown. By applying a series of trend analysis, nonstationary frequency analysis, and spatial characteristics analysis, this study investigates urbanization effects and contributions on drought development, taking the rapidly developing Yangtze River Basin (YRB) as an example. Results indicate that urbanization leads to exacerbation of drought at three major urban agglomerations in YRB, which accounts for 46.62% of total variations for Standardized Precipitation Evapotranspiration Index (SPEI). Considering nonstationary features, urbanization appears to mitigate extreme drought conditions (1.14%) while drought duration and severity are increased (9.02%) and enhanced (9.12%) under 50-year return period over YRB, respectively. From the spatial perspective, area of urbanizing region in a drought event also indicates a significant increasing trend during 1981 to 2018. These findings further confirm that urbanization appears to be a notable local factor that leads to the modifications of regional drought development. The results are expected to provide implications for mitigating drought impacts and making related policy.