The extent of urban specialization is closely related to urban development level. This paper distinguishes relative specialization and absolute specialization in terms of their connotations and measurement methods, and examines functional specialization in general. Using data on prefecture-and-above cities in China, this paper also reviews the characteristics of indicators of urban specialization in China. The findings are as follows. There exists a U-shaped relationship between the relative specialization index and city size and income level; the absolute specialization index shows a significant negative correlation with city size and a significant positive correlation with income level. Functional specialization coefficient and city size manifest a significant positive correlation; there is clear division of functions among city clusters, and functional specialization coefficient is significantly related to administrative level of cities. Finally, from the perspective of functional division and specialization of cities (city clusters), this paper makes the proposition of coordinating the spatial, scale and industrial structures of Chinese cities.