Animals living in urbanized habitats often show reduced fear responses to humans compared with their rural conspecifics. This is usually assumed to be the result of habituation, but may also be explained by differential colonization or local adaptation. To contrast these hypotheses, we studied the fear responses of urban and rural house sparrows (Passer domesticus) to humans, by measuring flight initiation distances (FID) in free-living flocks and observing the hiding behavior of wild-caught individuals in response to repeated human disturbance in captivity. We found that although sparrows had shorter FID at urban compared with rural sites, sparrows from both habitat types were equally likely to hide when they were disturbed for the first time in the new captive situation. Both urban and rural sparrows decreased their time spent hiding over the course of 8 trials, but the decrease was faster in urban sparrows. This difference was primarily due to a decrease in the sparrows’ immediate response (reactivity) to the disturbance, whereas the speed of recovery after disturbance increased similarly over trials in urban and rural birds. These results demonstrate that urban individuals habituate faster to human disturbance than their rural conspecifics. Our findings suggest that the reduced fear of urban animals is the result of behavioral plasticity, whereas we found no evidence for their higher intrinsic boldness as predicted by differential colonization and local adaptation.