Georeferencing by place names (known as toponyms) is the most common way of associating textual information with geographic locations. While computers use numeric coordinates (such as longitude-latitude pairs) to represent places, people generally refer to places via their toponyms. Query by toponym is an effective way to find information about a geographic area. However, segmenting and parsing textual addresses to extract local toponyms is a difficult task in the geocoding field, especially in China. In this paper, a local spatial context-based framework is proposed to extract local toponyms and segment Chinese textual addresses. We collect urban points of interest (POIs) as an input data source; in this dataset, the textual address and geospatial position coordinates correspond at a one-to-one basis and can be easily used to explore the spatial distribution of local toponyms. The proposed framework involves two steps: address element identification and local toponym extraction. The first step identifies as many address element candidates as possible from a continuous string of textual addresses for each urban POI. The second step focuses on merging neighboring candidate pairs into local toponyms. A series of experiments are conducted to determine the thresholds for local toponym extraction based on precision-recall curves. Finally, we evaluate our framework by comparing its performance with three well-known Chinese word segmentation models. The comparative experimental results demonstrate that our framework achieves a better performance than do other models.