Based on the time series data from 1993 to 2011, this article empirically explored the relationship between urbanization and real-estate development in Shandong Province by vector autoregressive model. The results indicated that the urbanization level and real-estate development had long-term co-integration relationship. And the effect of error correction item to urbanization was more obvious than to real-estate development in the short-term. Real-estate development was the Granger causality to urbanization, but urbanization was not the Granger causality to real-estate development. The response of urbanization to its own one standard deviation innovation was obvious first, and then declined rapidly. From the second period, it increased gradually. Its response to the impulse of real-estate development increased rapidly from 1-3 periods, and then kept slow growth. The response of real-estate development to its own one standard deviation innovation and the impulse of urbanization were positive and strong first, and from the fourth period the response increased gradually