Between 1991 and 2006, average weekly physical activity among adults in China fell by 32%. This paper discusses why total and occupational physical activity levels have fallen, and models the association between the rapid decline and various dimensions of exogenous community urbanization. We hypothesize that a) physical activity levels are negatively associated with urbanization; b) urbanization domains that affect job functions and opportunities will contribute most to changes in physical activity levels; and c) these urbanization domains will be more strongly associated for men than for women because home activities account for a larger proportion of physical activity for women. To test these hypotheses, we used longitudinal data from individuals aged 18-55 in the 1991-2006 China Health and Nutrition Surveys. We find that physical activity declines were strongly associated with greater availability of higher educational institutions, housing infrastructure, sanitation improvements and the economic wellbeing of the community in which people function. These urbanization factors predict more than four-fifths of the decline in occupational physical activity over the 1991-2006 period for men and nearly two-thirds of the decline for women. They are also associated with 57% of the decline in total physical activity for men and 40% of the decline for women. Intervention strategies to promote physical activity in the workplace, at home, for transit and via exercise should be considered a major health priority in China.