The outward urban land expansion of the non-core areas within a city, which is a typical characteristic of China’s urbanization during the past two dacades, complicates the environmental pollution effect of urbanization. Based on the panel data of 273 prefecture-level cities in China from 1997 to 2020, this paper explores the environmental pollution effect and the regional heterogeneous environmental impact of urbanization process from the perspective of urban boundary expansion reflected by the non-built-up urban regions. The results show that the environmental pollution effect of urban boundary expansion shows a U-shaped relationship, that is, urban boundary expansion is helpful to reduce environmental pollution in the initial stage; however, excessive boundary expansion is significantly detrimental to environmental improvement. In particular, urban boundary expansion is comparatively easy to cause environmental pollution effect in third- and fourth-tier cities and cities in central and western China. Given the heterogeneous environmental pollution impacts caused by urban boundary expansion, we suggest that high-tier cities could maintain moderate boundary expansion by optimizing the spatial layout of various functional units for the newly expanded urban region and enhancing the integration with the early core urban areas. In contrast, we suggest prohibiting the disorderly expansion of low-tier cities and enhancing comprehensive management of the expanded areas. Moreover, given the U-shaped relationship between urban boundary expansion and environmental pollution, we suggest lowering the possibility of going across the inflection point and mitigating the adverse pollution effect through enhanced population-land spatial coupling, strict environmental regulations, and multi-channel compensation.