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Municipal amalgamation is one of the core policy tools for Chinese government intervention in urbanization. The city-county merger policy provides a valuable research object for examining whether government-led urban expansion improves the quality of public services. By using city panel data from 2003 to 2019, this paper examines the policy effects of city-county mergers on the quality of public services using the Propensity Score Matching-Difference-in-Differences (PSM-DID) model. The results indicate that, after controlling for other factors, city-county mergers have increased the quality of public services by 1.2%. A placebo test has validated the robustness of this positive effect. Through further tests, the paper finds that the policy has positively affected all three aspects of the quality of public services in China: education, health care, and transport infrastructure, with the greatest impact being on education. Using a case study of a city-county merger in the Fenghua District of Ningbo, this paper depicts the transmission mechanism and argues that the policy affects the quality of public services by providing institutional security (financial and administrative power) and promoting regional integration in the new city area.