Abstract: Under the background of rural revitalization, combined with the problems and reasons of traditional rural settlement renewal, this paper puts forward the basic strategies of rural settlement renewal and transformation aiming at "small beauty regeneration", which includes combing of village sites, continuation of architectural style and activation of settlement space. Taking Shuiyu Village as an example, a series of specific strategies were taken to activate the inherent vitality of the village, so as to realize the "small beauty regeneration" of "mountain dwelling and big beauty", hoping to explore a universal significance of traditional rural settlement renewal ideas with the typical case of Shuiyu Village.