This study investigates the impact of low-skilled immigrants on urban labor markets in China. Using historical migration networks as an instrumental variable to overcome endogeneity problems, we find that low-skilled immigrants significantly increase local wages. Census data reveal significant occupational segregation between low-skilled immigrants and local inhabitants. Low-skilled immigrants are found to substitute for low-skilled local inhabitants but are complementary for high-skilled local inhabitants. In addition, low-skilled immigrants boost women's labor participation and wages through consumption service markets. This study's findings reveal that discrimination against low-skilled immigrants weakens the reciprocal effects among immigrants and local inhabitants and hinders urban development.