China’s implementation of innovative development strategies and the sharing of development results by the whole society aims to make all the people have a greater sense of gain and happiness, so as to achieve common prosperity. In this context, by using the China Household Income Project (CHIP) database, we study the impact of urban innovative development on residents’ happiness. The results show that,firstly, urban innovative development significantly improves residents’ happiness, and the conclusion still holds after a series of robustness tests. Second, urban innovative development has significantly improved the happiness of all residents by creating more jobs, innovating infrastructure construction and raising residents’ income levels. Third, in the process of urban innovative and development, urban residents, highly educated residents, healthy residents and residents in cities with high economic development level have obtained higher levels of happiness. Fourth, residents’ happiness mainly comes from the “quality effect” of urban innovative development, that is, the quality of urban innovative development significantly improves residents’ happiness. Based on the above conclusions, this study puts forward the following policy suggestions. First, the government should focus on improving the quality of urban innovative development, and realize innovative development oriented to meet the needs of residents. Second, the process of urban innovative development should pay attention to the changes in the welfare level of different types of residents. Third, the government should further promote the construction process of national innovative cities and strengthen the supervision mechanism of national innovative city achievements. Fourth, the government should create more employment opportunities through innovation and development, improve the construction of innovation infrastructure, and increase residents’ income, so as to improve residents’ happiness. This study connects urban innovative development with residents’ happiness, and provides theoretical basis and policy suggestions for realizing common prosperity.