Rapid urbanization has resulted in substantial alterations to urban morphology, subsequently influencing the thermal environment. Utilizing Landsat 5/7/8 satellite remote sensing imagery and an adjusted Local Climate Zone (LCZ) scheme, this research examines Beijing and Shanghai, two megacities, as case studies. The analysis examines the transformations in urban morphology composition and surface urban heat island (SUHI) effect from 2000 to 2020. The study discloses notable disparities between Beijing and Shanghai regarding LCZ classifications and the progression of the thermal environment. In Beijing, the expansion of built-up area was restricted, with compact LCZ classes predominantly characterizing the built-up areas. Their land proportion decreased from 32.46% in 2000 to 26.1% in 2020. In contrast, Shanghai experienced a significant expansion of its built-up area, with open LCZ classes predominating within these built-up areas. Their land proportion increased from 23.4% to 44.4%. Accordingly, Beijing’s SUHI intensity rose from 3.94°C in 2000 to 4.9°C in 2020, while the proportion of its heat island area declined from 72.8% to 56.9%. Meanwhile, Shanghai’s SHUI intensity diminished from 4.21°C to 2.18°C, with the proportion of its heat island area increasing from 64.0% to 69.9%. Based on these observations, this paper proposes strategies to enhance the thermal environment, focusing on structural optimization and layout adjustment. The objective is to offer valuable insights for urban planning and development, thereby augmenting cities’ ability to adapt to climate risks.