Transition Characteristics and Driving Mechanisms of Rural Settlements in Suburban Villages of Megacities under Policy Intervention: A Case Study of Dayu Village in Shanghai, China

China’s distinct rural revitalization process has attracted global attention due to its impressive speed, massive scale, and policy interventions. A relatively limited amount of research has been conducted on how rural transition characteristics and policy mechanisms are interrelated at the micro level. To fill this research gap, following the main research thread of dividing rural development stages, revealing transition characteristics and exploring policy mechanisms, this paper utilizes a participatory rural appraisal, a landscape metrics analysis, and in-depth interviews to analyze the spatial transition laws of Dayu Village. First, the results show that the village experienced three stages from 1990 to 2020: strict homestead control, village relocation, and land consolidation. Second, the village exhibits multidimensional transition characteristics. With a reduced rural settlement area, regular patch formation, and a dense interior subdivision of rural houses, the land use layout changed from homogeneous to multiple nests. As the industrial structure became more diversified, the villagers’ livelihoods became more differentiated. Inflows of tourists and migrants changed the population structure, causing social relations to become defamiliarized. Moreover, mechanism research finds that policy can promote rural settlement transition by allocating land resources and regulating village behavior. The policy’s scope expanded from a single settlement to the whole village, optimizing external forces, with village behavior effects acting as an internal force. The degree of matching between policy formulation and villagers’ needs is the key to promoting the transition of rural settlements. This research deepens the understanding of the transition laws of suburban villages in megacities in developing countries at the micro scale and provides a reference for land policies in similar villages.