In this paper, a land utilization efficiency evaluation model, which takes environmental loss into consideration, has been structured via taking advantage of the slack-based measure (SBM) model. Meanwhile, based on the panel data from 280 prefecture-level cities in China from 2003 to 2013, the paper thoroughly probed into, and discussed, the effect imposed by industry clustering and specialization on the utilization efficiency of urban land. Research results indicate several conclusions, as follows: (1) Taking environmental loss into account, the land utilization efficiency of prefecture-level cities in China is generally low. During the research period, the average value of the land utilization efficiency of prefecture-level cities in China is only 0.349, with, first, a declining trend, and then a rise. Geographically speaking, the land utilization efficiency presents a “depression in the center” phenomenon which means the land utilization efficiency of prefecture-level cities in the central China are relatively lower than in the east and west. Now, the difference among the urban land utilization efficiency in China significantly reflects the distinctions among Eastern, Western, and Central China. Moreover, the contribution degree of the difference of the land utilization efficiency among cities of central China to the aggregation difference shows an ascending momentum. Additionally, the relation between the population scale and land utilization efficiency in cities manifests as a U shape; (2) theoretically speaking, the relation between industry clustering and urban land utilization efficiency presents an inverted-U shape. However, this kind of relation is not significant in Western and Central China and medium-sized cities. Moreover, most of cities are still relatively far away from the inflection point or the critical value; and (3) the industry professional level has imposed a positive influence on urban land utilization efficiency. However, that influence is not significant in Eastern China and large cities. Consequently, strengthening the industry professional development of Western and Central China and small and medium-sized cities, facilitating diversified development of industries in Eastern China and large cities, and accelerating industrial clustering, all of these measures above will be conducive to improving urban land utilization efficiency in China.