The paper selects slope, aspect, relief degree of land surface, vegetation index, hydrology, transportation and climate as evaluation indexes and sets up the Human Settlements Environment Index (HEI) model to evaluate the environment suitability for human settlements in Shiyang River Basin. Through using spatial analysis technique of GIS such as spatial overlay analysis, buffer analysis and density analysis to establish the spatial situation of nature suitability and spatial pattern for human settlement. The results showed that: the index of nature suitability for human settlement in the Shiyang River Basin was between 17.13 and 84.32. In general, nature suitability for human settlement decreased from southwest to northeast. Considering area, the suitable region was mainly distributed in Minqin oasis, Wuwei oasis and Changning basin, which accounted for about 1080.01 km2, 2.59% of the total area. Comparatively suitable region was mainly distributed around the county in Gulang, Yongchang and north of Tianzhu County, which accounted for about 1100.30 km2. The common suitable region was mainly distributed outside of the county in Yongchang, Jinchuan and most part of Minqin county, which accounted for about 23328.04 km2, 56.08% of the total area. The non-suitable region was mainly distributed upstream and north of the river, which accounted for about 9937.60 km2, 23.89% of the total area. Meanwhile, the most non-suitable region was distributed around the Qilian Mountain which covered by snow and cold desert and the intersecting area between Tengger Desert and Badain Jaran Desert. The total area was about 6154.05 km2, which accounted for 14.79% of the total area. Suitable regions for human inhabitance were distributed mainly around rivers in the form of ribbons and batches, while others are scattered. Their distribution was identical with the residential spatial pattern. There was a clear logarithm correlation between situation of residential environment and population, that is, the coefficient of determination between evaluation value of residential environment and population density reached 0.851 2. There was also positive correlation between situation of residential environment and economics, which reached 0.845 4 between evaluation value of residential environment and GDP. Result also shows the environment is difficult to support the existing population in the Shiyang River Basin. Spatial distribution of population was profoundly affected by severe environment such as the expanded deserts, the wavy terrains, and the changeful climate. Surface water shortage and slow economic growth was the bottleneck of nature suitability for human settlement in the Shiyang River Basin. So according to these problems and various planning, some of the residential parts need to relocate in order to improve situation of residential environment.