Abstract: Rural settlements are the places of habitation, production and living for rural population. Research on rural settlements can better reveal the formation of rural settlements and the relationship between the life and environment. Nowadays, the ecological environment problems caused by the rural settlement expansion and population growth have become more prominent, and the reasonable optimization of rural settlements layout and the protection of rural settlements ecological environment function are the key issues in the development of rural settlements. To clarify the spatial differentiation characteristics and optimize the layout of rural settlements in hill ecological protection area, this paper took the Sishui County, Shandong Province as a study case, and analyzed the spatial differentiation characteristics by using the nearest neighbor statistics, the spatial correlation measure model and the spatial metrics model; from 2 aspects of forest and water body based on the perspective of ecological protection and construction, the ecological protection pattern was built by using the minimum cumulative resistance model, and the optimization direction of rural settlement in Sishui county was explored. The results showed that: (1) The rural settlements of Sishui County had significant spatial distribution feature of agglomeration with the average density of 1.6-4 settlements per km2; the rural settlements mostly presented the cluster and scatter distribution in the northern and southern hilly areas, and the zonal distribution in the middle plain areas, with the spatial distribution characteristics of "dense in the north and south, sparse in the middle". (2) The majority of rural settlements in Sishui were small settlements, and the patch quantity accounted for 45.43% of the totality. There existed the rural settlements whose scale also had significantly low concentration characteristics, presenting the distribution situation of "large in the middle, small in the north and south". (3) The spatial differentiation in shape had obvious characteristics of complexity, poor continuity and fragmentation in Sishui County, and the shape of rural settlements in the middle plain areas had relatively small complexity, good continuity, and fragmentation, which was much more regular than that in the northern and southern hilly areas. (4) For the spatial distribution characteristics of the elevation, slope and river of rural settlements, it was found that the rural settlements were mainly distributed in the elevation of 73-250 m, the slope of 0-5° and the range of 0-600 m away from rivers. Based on the spatial differentiation of rural settlements, the slope, roads and different land use types were selected as the most important impact factors, and the forest and water ecological protection pattern was constructed; 4 types of layout optimization i.e. key remediation, restricting expansion, moderate construction and prior development were divided according to the impact of rural settlements on forest and water, and the construction and development directions of rural settlements were explored. The results of this study can provide the basis for the planning and development of regional rural settlements under the background of ecological protection and construction.