Abstract: The successful application for the world heritage of The Beijing-Hangzhou Grand Canal brings opportunities for the revitalization and development of rural areas in the canal basin. At the same time, the plight of rural space development and the revitalization needs of the canal basin have become the focus of social attention. The vast rural area in the canal basin has a unique green ecological and cultural history. It is a region where the production-ecology-living space blend, relate and rely on each other. However, under the long-term urban-rural dual system, rural space development problems such as the deterioration of ecological environment, the decline of traditional agriculture, the loss of young and strong labor force and so on, need to study the path of rural space reconstruction. Based on this, paper analyzes and summarizes the current situation and characteristics of the ‘rural production-ecology-living spaces’ in the canal basin. On this basis, in view of the practical difficulties and new requirements of the development of ‘rural production-ecology-living spaces’. It is proposed that the ecological space should be optimized by scientifically delimiting the ecological protection red line, constructing the ecological corridor, repairing the weak ecological space and strictly controlling the pollution discharge; and we should optimize the production space by means of large-scale production and the development of canal characteristic industries, and guide the rural revitalization by coordinating and integrating the rural three living spaces. In order to provide a useful reference for the reconstruction and optimization of the rural production-ecology-living space in the canal basin in a larger scope, the town village is selected for example analysis.