PSInSAR technology has been widely applied in ground deformation monitoring. Accurate identification of Persistent Scatterers (PS) is key to the success of PSInSAR data processing. In this paper, the theoretic models and specific algorithms of PS point extraction methods are summarized and the characteristics and applicable conditions of each method, such as Coherence Coefficient Threshold method, Amplitude Threshold method, Dispersion of Amplitude method, Dispersion of Intensity method, are analyzed. Based on the merits and demerits of different methods, an improved method for PS point extraction in urban area is proposed, that uses simultaneously backscattering characteristic, amplitude and phase stability to find PS point in all pixels. Shanghai city is chosen as an example area for checking the improvements of the new method. The results show that the PS points extracted by the new method have high quality, high stability and meet the strong scattering characteristics. Based on these high quality PS points, the deformation rate along the line-of-sight (LOS) in the central urban area of Shanghai is obtained by using 35 COSMO-SkyMed X-band SAR images acquired from 2008 to 2010 and it varies from −14.6 mm/year to 4.9 mm/year. There is a large sedimentation funnel in the cross boundary of Hongkou and Yangpu district with a maximum sedimentation rate of more than 14 mm per year. The obtained ground subsidence rates are also compared with the result of spirit leveling and show good consistent. Our new method for PS point extraction is more reasonable, and can improve the accuracy of the obtained deformation results.