Based on the investigation of urban villages (Chengzhongcun) in Guangzhou city of China, the study is aimed to clarify both the main policies associated with the formation of urban villages and the spatial evolution process of urban villages. Conclusions can be given as follows:1. Due to the rapid development of economic and the system of compensated use of land carried out since 1988, the villages have been stimulated to increase urban land needs and accelerate the expropriation of land. The villages located in the suburban area have been dwindling and gradually brought into urban areas. Under the influence of industrial upgrading and immigration since 1990s, those villages brought the industrial transformation from the primary industry to the secondary and the tertiary industry, and a huge amount of housing construction for immigrants within themselves; 2. Meanwhile the territory of urban villages dwindled, their residential areas have expanded to become high-density in both population and buildings. On the other hand, based on the location and the influence of policies, urban villages still have their own spatial characteristics in their old residential area.