China has been the engine of global urban population growth, with nearly one-third of the global urban population growth realized in China in 2000–2010. This rapid process of urbanization will continue in the coming decades based on media reports, thus raising concerns about urban land expansion and sustainable urban development in China. Using satellite images and government statistics as data sources, this study compared urban land expansion in Shenzhen and Dongguan, two adjacent and sometimes competing cities in the economically most dynamic region of China. Our data show that the two cities were similar in urban land expansion rate and intensity in 1990–2008 but Shenzhen had higher population growth and urban population density than Dongguan during the period, suggesting that Shenzhen had achieved a higher level of sustainable urban development than Dongguan. To explain this difference, we analyzed the driving factors and found that (1) Shenzhen was more successful than Dongguan in transforming its industrial structure to develop more capital- and technology-intensive industries; (2) Shenzhen had much higher total GDP and per capita GDP than Dongguan; (3) Shenzhen had benefited from a number of government policies targeted at the city's economic development; and (4) in addition to geographically adjacent to Hong Kong, Shenzhen had better transportation facilities than Dongguan, including an international airport and three container ports. Through these favorable driving factors, more people had moved into Shenzhen and, in the process, helped transform the city to become more sustainable in its urban development. The findings of this study can help us better understand urbanization in China.