Diversity and differentiation have become the hallmarks of contemporary Chinese rural settlements. Spatial differentiation of rural settlements' multi-function is important to fully understand characteristics of rural society under rapid social and economic changes in China. Few studies have systematically evaluated the impact of such change on the rural settlements' functions. Based on the "Distance attenuation" principle, and using the county as the regional center, we classified 112 rural settlements of Changzhi city, Shanxi province into four types: urban villages, suburban villages, outer suburban villages and remote villages. Then we recognized multifunctional of the rural settlements as daily life function, agricultural production function, and non-agricultural production function based on different social-economic factors that were carried by corresponding land use types. Finally, we chose indicators from the attributes of the rural settlements to study regional differentiation of rural settlements' functions. Methods of participatory rural appraisal, combined with GIS technology and remote sensing image were used. The results showed that attributes of rural settlements' multi-function changed regularly. With approaching to the county, rural houses and households were improved more frequently along with the improvement of service facilities of the rural settlements. As approaching to the county, the household income from agricultural production decreased, and the households tended to gradually give up agricultural production function. Also when approaching to the county, areas for non-agricultural production were expanded and the contributions of income from non-agricultural production for rural households increased. Finally, we constructed a multi-functional quantitative mathematical equation of rural settlements to measure multi-function dominance of rural settlements based on the index of rural settlements' functions. Comparative advantage function of different types of the rural settlements was remarkable difference. The comparative advantage functions of the urban villages were daily life function and agricultural production function, and these two functions had the location quotient of 1.09 and 1.92, respectively. Similar results were found with the suburban villages (1.04 and 1.11). The comparative advantage function of the outer suburban villages and the remote villages was agricultural production function. Their location quotient reached 1.47 and 1.72, respectively. We suggested that based on this research it was necessary to implement rural residential consolidation considering the multifunctions and their attributes of rural settlements. The proportion of land use within the rural settlements bearing economic activities, especially non-agricultural activities increased in urban villages and suburban villages. The household income was dependent on economic activities of the residences. While in the outer suburban villages and the remote villages, many residences moved out to work in non-agricultural sectors. However, there were still many people engaged in farming in those areas. Based on this study, we suggested that on the one hand, governments at all levels should strengthen the non-agricultural production function of urban villages and suburban villages in order to attract more elements gathering, such as more labor force who came from other areas. On the other hand, governments should strengthen agricultural production of outer suburban villages and remote villages. For the outer suburban and remote villages, daily life function was relatively weak and had no comparative advantage for improvement. Governments should help to repair houses and improve service facilities of these two types of rural settlements so that an evenly developed and harmonious rural society can be built. [ABSTRACT FROM AUTHOR]