In some developing countries, as a huge amount of people immigrating to the urban area, the expansion of informal urban area with bad living conditions is more and more becoming a severe problem. In China, an informal urban area called Chengzhongchun (village inside city) has become a universal phenomenon in most of Chinese large and medium-sized cities. Discussion and research concerning the village inside city has become more and more a new focus. To improve the living conditions in Chengzhongchun , reconstruction and transformation has gradually been conducted since the year 2000, However, there is still no case being acknowledged as a successful example Moreover, the value judgment and the limit of reconstruction and transformation are still under discussion, This article is aimed to investigate how the reconstruction and transformation being conducted and to identify existing problems during the reconstruction and transformation process.