Abstract: The comprehensive improvement of the environment of small towns is another key point of the construction of "two beauties" in Zhejiang Province after the beautiful villages and beautiful counties. The Grand Canal ancient town is a special kind of small towns. Because of the excessive density of the town, the old infrastructure and the serious functional retreat, the environmental problems are more prominent. Based on the problem orientation, this study focuses on solving the major problem of "how to do the comprehensive environmental improvement planning of canal ancient town", and coordinating the three relationships among "ancient town and new area", "face and lining", and "protection and utilization".