Based on social embeddedness theory, this paper aims to explore the influence mechanism of network embeddedness and environmental awareness on farmers’ participation in improving rural human settlements (IRHS). This research applies the Logit model and the Bootstrap method, using survey data from 495 farmers in Hubei Province, China. The results show that: (1) relational embeddedness has a significant negative impact on the centralized treatment of farmers’ domestic sewage, implying that strengthening the relationship between farmers and households helps to provide them with centralized treatment for domestic sewage; (2) environmental awareness has a significant positive impact on the centralized treatment of farmers’ domestic sewage, implying that the enhancement of farmers’ environmental awareness increases the promotion centralized treatment for domestic sewage; and (3) structural embeddedness can further affects farmers’ environmental awareness and then affects their participation in the centralized treatment of domestic sewage, implying that environmental awareness has a mediating effect between structural embeddedness and the centralized treatment of farmers’ domestic sewage. Overall, it is necessary not only to encourage the establishment of extension and discussion networks for farmers (relational embeddedness) to participate in IRHS but also to improve environmental education for farmers, especially by increasing their access to environmental knowledge and information (environmental awareness in mountainous areas, and, finally to support farmers. The relationship between the members and the village cadres (structural embeddedness) can further improve farmers’ awareness of participation in IRHS to better guide them in the centralized treatment of domestic waste and domestic sewage.