Utilizing panel data from 264 prefecture-level cities in mainland China between 2009 and 2017, this study employs a multi-period difference-in-differences model and propensity score matching to assess the effects of county-to-district transformation (CDT) on the scale, proportion, and price of the urban residential land supply. The findings reveal the following details: (1) CDT led to a short-term increase in the overall proportion and price of this land, whereas its influence on the scale of the supply exhibited a time lag; (2) the policy’s impact on residential land supply varied across different types of cities, with a more pronounced effect on the scale, proportion, and price in large cities; and (3) the current implementation of CDT primarily modified the urban land’s supply–demand relationship through the expansion of built-up space, conversion of spatial function, and agglomeration of population and the labor force, consequently affecting the supply of the aforementioned land. Finally, this paper puts forward relevant policy suggestions on how to adjust land supply and effectively regulate the land market during the process of promoting the withdrawal of counties in the future.