Based on the data from China's Fifth and Sixth Census, this article analyzes the urban functional divisions and its change in the cities of the Yangtze River Economic Belt (YREB) from 2000 to 2010 with respect to the specialized sectors, scale, and degree of intensification. The results show that, (1) the basic urban functions of YREB include manufacturing, construction, commerce, real estate, scientific research and other services. (2) Yangtze River Delta Area prominently featured by city agglomeration and metropolitan industrialization, is the industrial center of YREB; And there are great achievements in industrial gradient transfer but lack of national level regulatory guidance mechanism by districts or levels, thus causing great pressure in eco-environmental protection. (3) Construction and real estate industrial functions are transferring from the cities in the lower-reach of the Yangtze River Basin to the cities in the middle- and upper-reaches, and propelling rapid and strong development of producer and consumer services including commerce, scientific research, finance, social and other services. However, there are problems such as serious urban industrial isomorphism and insufficient agglomeration of central cities. (4) It is difficult for the function declining of transportation and communication industries to support the smooth implementation of the National Strategy of YREB. Based on the above discussed problems, the innovative management mechanism is proposed to foster an integrated system of urban functional divisions for river basin development; the river industrial standards for access are recommended to ensure the coordinated development of green city functional system; the new national level districts and urban agglomerations are suggested to serve as the complementary approach to make the urban functional system more comprehensive, and the multi-modal transport corridor of YRBE could be used to enable the optimization of resource allocation along the Yangtze River.