Despite several previous studies, the potential differential impact of urbanization on energy consumption and CO_2 emissions across stages of development has rarely been investigated. This paper attempts to fill this knowledge gap by examining the influence of urbanization on national residential energy use and emissions in low-, middle- and high-income countries. Using the Stochastic Impacts by Regression on Population, Affluence and Technology (STIRPAT)model and a sample of 88 countries for the period 1975-2005, interestingly, the results suggest that urbanization decreases residential energy use in the low-income countries, while it increases residential energy use in the high-income countries. In the middle-income countries, household energy consumption first falls and then rises with urbanization with a turning point at about 70%. Conversely, based on a sample of 80 countries over the same period, this study shows that urbanization increases residential emissions in the low- and middle-income countries, whereas the residential emissions of the high-income countries rise initially and decline subsequently with urbanization with a turning point at around 66%. These findings imply that urbanization brings with it both costs and benefits. These tradeoffs should be considered in future discussions of global energy and climate change policies.