Understanding the relationship between environmental pollution and economic development is of great importance for achieving sustainable growth. It is particularly important for managing watershed regions, where rapid urbanization can cause significant environmental damage. This study aimed to determine the relationships between urbanization, economic growth, industrial structure and nitrogen emissions in the Jishui River Basin from 1997 to 2013. Based on the raw data, a vector auto-regression model was built, and the data were analyzed using the Johnson cointegration test, the Granger causality test, impulse response function analysis and variance decomposition analysis. The results showed that there was a long-run equilibrium relationship and a one-way causality between the four variables in the Jishui River Basin. The effects of economic growth and industrial structure on nitrogen emissions were significantly stronger than the effect of urbanization levels. In the long run, economic growth and industrial structure had a strong explanatory power for nitrogen emissions, and the contribution of urbanization levels, economic growth and industrial structure to nitrogen emissions showed some hysteresis. This study clarifies the main drivers of changes in environmental pollution in the Jishui River Basin, and provides a scientific basis for urban development models and regulation of industrial growth.