Abstract: Settlement consolidation is an important way to alleviate farmland pressure in the urban-rural fringe, improve land-use conformation and adjust the relation of land usibility. Potentiality estimation of settlement consolidation is a foundation work for settlement consolidation. Taking Jinyuan District of Taiyuan City of Shanxi Province as an example,　the models of the settlement consolidation in the urban-rural fringe, potential analysis, grade dividing and the methods of effective assessment were discussed. The research provides the methods of potential analysis of the settlement consolidation in the urban-rural fringe.