Abstract: Abstract: It has great significance to study the trade-off mechanism of productive and dwelling space of rural settlement and the optimized of its productive and dwelling space nowadays in China, which is one of the basic means to improve the rural habitat environment and adjust the inner structure of rural residential land. With the development of socio-economic, productive and dwelling space of rural settlements gradually diversified in developed areas such as suburban areas and industrial areas in eastern China, which present reciprocal tradeoffs. These changes distinguish from the abandonment and hollowing of productive and dwelling space of rural settlements in traditional agricultural area. However, current researches mainly consider the rural settlement as a single entity and tend to neglect its inner productive and dwelling space. This paper introduces the concept of ecosystem service trade-off, analyzes the trade-off between productive space and dwelling space of rural settlements in economically developed areas from the aspects of "types of trade-off, driving forces, effects," and then this paper puts forward the idea of optimizing the productive and dwelling space of rural settlement. The results show that, the trade-off of productive and dwelling space of rural settlements which in developed areas, is caused by the diversification of farmers' livelihood and the development of non-agricultural industries in rural areas, farmers have a demand for living apace, industrial and commercial space, and choose various functional spaces according to their needs. According to the spatial combination of productive space and dwelling space of rural settlement, the trade-off types can be divided into residential-industrial space trade-off, residential-commercial space trade-off, residential-rental space trade-off, multi-space trade-off and so on. Land use versatility and the diversification of productive and dwelling space of rural settlement that driven by industrialization and urbanization is the premise of the productive and dwelling space trade-off of rural settlement. The types and its variations of productive and dwelling space trade-off of rural settlement are directly determined by the livelihood and life needs of farmers. While the land plan control by the government and the lack of village planning has exacerbated the process of the productive and dwelling space trade-off of rural settlement. The trade-off of productive and dwelling space of rural settlement improves the livelihoods of farmers and promotes the economic development and the vitality of rural areas, but also causes a variety of negative effects, such as the spatial clutter of rural settlements, the deterioration of human living environment and other problems. The reconstruction model of rural settlement as homogeneous space is far from the needs of farmers. In the future, under the background of the shortage of construction land in rural areas, it is necessary to meet the diversified demands of farmers and the optimizing of the productive and dwelling space of rural settlement by the multifunctional composite and functional improvement of land use of rural settlement. This paper puts forward the concept of productive and dwelling space trade-off of rural settlement, which provides a new perspective for the study of rural residential transition and a new idea for improving the rural space quality and the residential living environment, and promotes the formation of scientific and reasonable village planning. Above all these will serve for rural revitalization strategy in China.