Habitat International, Volume 41, January 2014, Pages 262–271. Diversity, complexity and change have become the hallmarks of contemporary Chinese rural settlements. However, the literature so far has paid insufficient attention to this phenomenon from the standpoint of functional transition and related land-use change. To fill in this gap, this paper explores the functional transition of rural settlement through analyzing land-use differentiation in a transect of Beijing. Land-use changes are presented along the differentiation of land-use structure and use change of rural housing. The results indicate that there is an obvious differentiation of land-use structure from near-urban countryside to the rural hinterland. Besides that, the use change of rural housing also has regional characteristics. They are different responses to the urban sprawl, respectively from the collective economic organization and single rural resident. The regional differentiation implies a functional transition in some rural settlements, including increases of non-agricultural function and urban servicing function. Quantitative evaluation of the functional intensity and its rules on spatial–temporal evolution still need to be approached in the future.