Traditional regional and urban economics emphasizes the effect of agglomeration economy on urban economic growth. The concept of “agglomeration economy” refers to the external impact derived from the spatial concentration of economic factors and economic activities. However, the flow of various material elements and non-material elements is accelerating with the rapid development of infrastructure and information technology, and the urban network consisting of big cities as the center and small towns become the main form of regional economic system. The research object of this paper is the externality effects between urban units in urban network, and aim to analyze the impact of urban network externality on economic development. Compared with agglomeration economy, urban network externality emphasizes the influence of spatial dynamic externality on the much larger spatial scale, which does not depend on the spatial proximity of economic factors. The text is divided into four parts. First, there is an introduction to the relationship between urban network externality, agglomeration economy and economic growth. And the theoretical mechanism of urban network externality promoting economic growth is explained detailly. Second, the urban network among 273 prefecture-level cities in China is constructed based on the data of train frequency of intercity railway, and the network structure and hierarchical characteristics are described. The third part introduces the composited spatial weight matrix established from train frequency and distance between cities, and examines empirically the urban network externality by using the spatial econometrics method. Finally, conclusions and policy implications are exposed. The results show that capital and labor are still the primary driving force of urban economic growth and economic development has positive spillover effect through urban network connection, that is, the externality of urban network can promote urban economic growth. In the urban network, the urban nodes with different degree have different influence on the urban network externality. The higher the node closeness is, the stronger the city network externality will be.