Rural decline has become a global problem. To address this issue, the division of rural functions and identification of driving factors are important means of rural revitalization. Taking the town area as a unit, this study conducts a division and evolution analysis of rural regional functions in Jiangsu province in coastal China by constructing an evaluation system using the spatial econometric model to diagnose endogenous and exogenous driving factors of rural multifunction formation. The results show that the functions of agricultural supply and ecological conservation have decreased, while the functions of economic development and social security have increased. Agricultural production functions are concentrated in northern and central Jiangsu. The economic development function is mainly based on industrial development, and is the strongest in southern Jiangsu. Social security functions are concentrated in suburban area, county centers, and key towns. High-value areas of ecological conservation are concentrated along lakes, the coast, and hilly areas of southern Jiangsu. The multifunctional development of villages and towns is affected by endogenous and exogenous factors, including economic geographic location, natural resources, economic foundation, human capital, traffic conditions, market demand, infrastructure, and environmental governance. Natural factors have a significant impact on the supply of agricultural products and the formation of ecological conservation functions. The effects of socioeconomic factors on these four functions differ significantly. This study expands the theory of rural development functions, the classification and zoning paradigm, and the quantitative study of driving mechanisms. The results provide a reference for practical value and policy significance for the reconstruction of rural functions and rural revitalization.