The urban population size in different countries and historical periods is very different. By Kernel density function, the analysis of population size distribution of Chinese cities shows that it is reasonable to define a city with 5 million above urban permanent population as megacity. From the perspective of dynamic process of urban population size change, the change is mainly influenced by city industry and economic development. The analysis of actual population size change in principal megacities of China shows that the regulation and control on the population size of megacity should depend on time and place without imposing uniformity, and the focus of population regulation and control policy should turn to structure optimization from quantity control. Population new normal constrain such as peasant worker supply shortage, relative surplus of college graduates, continual growth of the old and the young as non-labor force population, etc. challenges the transformation and upgrading of megacities. On the background of such population growth new normal, megacities should hold the line of marketization reform, and institution innovation of the government and technology and management of enterprises is the basic power to drive the transformation and upgrading of cities.