Urban expansion is a phenomenon of urban space increase, and an important measuring index of the process of urbanization. Taking Shanghai as an example, the changes of urban average height and built-up area were studied to represent city’s vertical and horizontal increases respectively, and statistical methods were used to analyze the driving forces of urban expansion. The research drew following conclusions: 1) The urban expansion process of Shanghai from 1985 to 2006 had a clear periodic feature, and could be divided into three stages: vertical expansion in dominance, coordinated vertical and horizontal expansion, and horizontal expansion in dominance. 2) The average height and quantity of buildings in core city were significantly bigger than those in suburbs, but the changing speed of the latter was faster. And 3) urbanization process was the major driving force for the city’s horizontal expansion, while industrial structure improvement was the key driving factor for the vertical expansion. Those two driving forces were simultane-ously affected by city’s political factors.