Urban shrinkage has gradually become an issue of world-concerning social matter. As urbanization progresses, some Chinese cities are experiencing population loss and economic decline. Our study attempts to correct and integrate DMSP/OLS and NPP/VIIRS data to complete the identification and measurement of shrinking cities in China’s Yangtze River Economic Belt (YREB). We identified 36 shrinking cities and 644 shrinking counties on the municipal and county scales. Based on this approach, we established the average urban shrinkage intensity index and the urban shrinkage frequency index, attempting to find out the causes of shrinking cities for different shrinkage characteristics, city types and shrinkage frequencies. The results show that (1) the shrinking cities are mainly concentrated in the Yangtze River Delta city cluster, the midstream city cluster and the Chengdu–Chongqing economic circle. (2) Most shrinking cities have a moderate frequency of shrinking, dominated by low–low clusters. Resource-based, heavy industrial, small and medium-sized cities are more inclined to shrink. (3) The single economic structure, the difficulty of industrial transformation and the lack of linkage among county-level cities are possible reasons for the urban shrinkage in the YREB. Exploring the causes of urban shrinkage from a more micro perspective will be an inevitable task for sustainable development in YREB and even in China.