This article establishes an evaluation system of urban human settlement environment with four first-level indexes as standard, including socio-economic environment, living condition, infrastructure and public service environment, and natural ecological environment, and 28 second-level indexes. With the method of entropy, the urban human settlement environment quality of 286 cities at prefecture level and above in 2000, 2003, 2006, 2009 is analyzed. The results show the urban settlement environment quality of Chinese cities is gradually improving in recent 10 years. Between citie, score gap is gradually narrowing, and the city rank changes within a certain range basically, but in the most of cities, urban human settlement environment construction is at a low development level. The spatial difference of urban human settlement environment quality is significant, and the distribution of cities at all city levels in each region is unbalance. With the urban human settlement environment quality decreasing from the eastern coastal regions to central and western regions, and from the south to the north. It shows that the eastern region has the advantages both in the number of cities belonged to the first three levels and in the proportion in different regions. Cities with the level of three, four and five dominate the central region, and those with the level of five and six dominate the western region. The economy is not deciding factor, but is the main factor resluting in the differences of urban human settlement environment, and is the prerequisite of improving urban human settlement environment. Therefore, to promote the economic development and to improve the urban economic strength is still the main development direction for cities. The cities with higher urban human settlement environment quality are distributed in the form of agglomeration, which fits well the urbanization strategy in China. There is correlation between urbanization level and urban human settlement environment quality: the level of urbanization is higher, the urban human settlement environment quality is higher. There is no correlation between urban human settlement environment quality and city size, sometimes, the quality of many small cities is higher than that of big cities. This means that city development should be coordinated with local conditions, and the process should be human-oriented, serve for human production and life, and not pursue the external scale. The process of urbanization is unbalanced, and many aspects need to be improved. Cities with higher grades have not been developing comprehensively, and ecological environment, infrastructure, public service, urban and rural gap do not develop sufficiently. This means many aspects of the process have not got enough attention, needing the elimination of the short boards to achieve the comprehensive improvement of urban human settlement environment quality.