Using statistical data from 285 cities in 2003-2012, this paper empirically studied the effect of industrial agglomeration on environmental pollution using spatial econometric model. The spatial autocorrelation tests showed that there was significant positive spatial correlation and local spatial agglomeration effects of urban environmental pollution. The spatial econometric regression showed that industrial agglomeration significantly aggravated environmental pollution, indicating that the negative environmental externalities caused by industrial agglomeration were higher than the positive environmental externalities. There was an inverted-U shape relationship between economic development and environmental pollution and it indicated that Environmental Kuznets curve existed in China. Finally, we put forward specific suggestions to improve environmental pollution based on the above conclusions of the paper.