The lack of land resource prompts space-limited city to change existing urban development mode. The cases of Hong Kong and Singapore show that the compact development mode, which requires construction land concentrated distribution and urban functions comprehensive allocation in urban center, meets the demand of space-limited city. The isolated and circle urban form of Xiamen Island makes Xiamen a typical space-limited city. So Xiamen Island is an ideal object for the study of urban compact development theory in the expansion of space-limited city. The urban landscape has obvious northern and eastern expansion trend in Xiamen Island. This paper chooses Xiahe-Jiahe Road as north-southern axes, and Hubinbei-Lüling Road as west-eastern axes. From south to north and from west to east, the two belt transects are divided into 10 quadrats, respectively. We select CA and PLAND landscape metrics in class level to analyze the landscape pattern feature of old town and vertical and horizontal development axes in Xiamen Island. We quantify space saturation by the urban construction area to available area ratio and urban function simplification by the max value of subtraction results of every urban function's PLAND value and six urban function's PLAND mean value in each quadrat. The more compact the quadrat is, the bigger the space saturation is and the smaller the urban function simplification is. The results show that: (1) Only 20% quadrats meet the requirements of compact city theory and the quadrats are far away from each other. That is to say, Xiamen Island has not yet formed in true compact city central district. (2) The urban functions are balanced for the quadrats at the northern and eastern end of Xiamen Island. The urban construction level is low and has potential for growth. (3) Although 65% quadrats have relative high space saturation, the urban function is still simple. Most quadrats are dominated by residence. The proportion of public service function and business service function are very small or even zero. (4) In the progress of the urbanization landscape expansions to the north and to the east, the strength of land use decreases, urban function comprehensiveness is low although there is a trend of increase and change of urban function in the major built-up area of Xiamen Island. In a word, the development level of Xiamen Island is far from the requirements of compact development theory. At last, we put forward six recommendations about compact construction and renewal development of Xiamen Island and point out the emphasis in future research.