Energy development has a significant impact on urbanization. This study employs the entropy method to evaluate the level of urbanization in Central Asia and further analyzes the possible dynamic transition mechanisms of the impact of energy development (characterized by energy development scale, energy trade, energy consumption, and energy endowment) on urbanization using the Panel Smooth Transition Regression model (PSTR). The results demonstrate that energy development in this region is characterized by “three highs and one low”, namely, high production volume, high export volume, high endowment, and low self-consumption, and plays a crucial role in the progress of urbanization. A nonlinear relationship is found to exist between energy development and comprehensive urbanization in the transition economies of Central Asia. Generally speaking, as energy development continues to expand, its impact on urbanization in this region has shifted from constraint to promotion, with the latter gradually tending to flatten out. Energy development characterized by energy development scale, energy consumption, and energy trade can prove the point, whose threshold is 1.47 million tons oil equivalent (Mtoe), 0.29 tons oil equivalent (toe) per capita, and 20.95 Mtoe, respectively. However, not all energy development models exhibit this behavior. Energy development characterized by energy endowment is such a case where the positive effect of it on comprehensive urbanization will be restrained when it exceeds 3.18. These findings can aid decision makers in seeking a better energy development model to promote the sustainable development of urbanization in Central Asia, avoiding energy resources waste and disorderly development.