The Three Gorges reservoir area (TGRA) is a typical immigrant and ecologically sensitive compound region. Exploring the land use transfer effects caused by the settlements change in the TGRA is of great significance to regional socio-economic development and ecological restoration. This study took the Caotangxi watershed in the hinterland of the reservoir area as the study area. Based on Google Earth high resolution image in 2000-2018, the land use effects of the settlement transition in mountainous areas was analyzed from the micro-scale in combination with local socio-economic development and naturally geographical environment. The results show that (1) the area around the expansion and natural growth settlements is mainly the transformation from the cultivated land to the orchard. Land-use transformation surrounding the declining settlements is mainly the transformation from the cultivated land to the orchard and forest land. The periphery of the disappearing settlement is mainly the transformation from the cultivated land and orchard to the forest-grassland and abandoned farmland. Both economic and ecological benefits have been improved. Besides the vanishing settlements, the land-use function of other three settlement types has gradually changed to the production-ecology function. The land-use function in the periphery of vanishing type is gradually focus on ecological function. (2) During the 2000-2010, the transfer of the labor force was a fundamental factor for the land-use type changes around settlements. Social and economic development in 2010-2018 was direct driving factor of land use transformation, and farmers' livelihood needs were the fundamental driving force of land land-use type changes. The change of settlements not only drives the transformation of land use, but also changes the main body of management in the watershed from individual farmer management to government-oriented and enterprise-oriented management subjects. The results of the study have positive effect on the ecological construction, the economic development of farmers and the improvement of human living environment in the TGRA.