Limited research on the influence of population decline on economic growth examines the large scale enterprise-level data. Based on the registration data of urban industrial and commercial enterprises and residents from 2009 to 2019, this study employs a fixed-effects model to examine the impact of population decline on enterprise entry in urban China and its mechanisms. The results reveal that, in urban China, population decline significantly restricts enterprise entry. On average, the population decline experienced by some cities led to an annual decrease of 2.5% in new enterprise entry nationwide from 2010 to 2019. On the supply side, the population decline reduces labor supply and inhibits technological progress, affecting labor-intensive and technology-intensive industries significantly. On the demand side, it curtails consumption demand, reduces investments, and hinders capital accumulation, impacting the entry of enterprises in hospitality, dining, sports, and entertainment industries. The effect is more pronounced in non-metropolitan and small to mid-sized cities.