Based on a large, nationwide, household-level survey data set collected in 2014, this article investigates the effect of economic incentives on the destination choices of Chinese new-generation rural migrants. Empirical results show that economic incentives have a significant positive impact on the probability of rural migrants' urban settlement intentions but with a diminishing marginal effect. We also find that the marginal effect of economic incentives on rural migrants' urban settlement decreases with the distance to their hometown. Furthermore, the variations of the impacts of economic incentives on rural migrants' settlement intentions are investigated with respect to education level, employment status, and regional heterogeneity. Finally, we discuss policy implications resulting from our empirical analysis. Over the last 2 decades, China has experienced massive rural-to-urban migration, the largest population flow in human history (United Nations, 2015). By the end of 2016, the number of Chinese rural migrants reached 281.7 million. However, constrained by the household registration system (hukou) and other institutional barriers, an astonishing number of migrants are marginalized in Chinese urban society through not being able to gain access to basic local public services and social security (Démurger, Gurgand, Li, & Yue, 2009; He & Wang, 2016). According to official statistics, by the end of 2013, approximately 53.7% of Chinese lived in urban areas but only 36% of Chinese had urban hukou (The State Council of the PRC, 2014). Encouragingly, since 2014, the Chinese government has launched the so-called people-oriented new-type urbanization campaign, which aims to promote better integration of rural migrants into the local urban society (The State Council of the PRC, 2014). The question of how to make rural migrants permanently settle down in the cities has been given increasing priority in the Chinese central government's political agenda. Nonetheless, although there is a large body of literature exploring the factors that affect migration decisions of Chinese rural farmers in China (