Residence zone and residential land were the top priority when we planned land use layout in a certain region, because residence zone lays a foundation for a reasonable land use structure and it helps the overall functions of an optimized living environment. Nanfen is a mountainous town in East Liaoning of China, where plenty of industrial and mining enterprises were allocated. All these features from geography and industrial activities in local environment determine the necessity and complexity for planning and allocating residence. In order to identify suitable areas for inhabited layout, the suitability of residential land-use in Nanfen District was evaluated in terms of niche fitness model. Assessment index were selected from the viewpoint of natural, economic and social factors. Results indicated the most suitable, sub suitable, barely suitable and unsuitable area for residential land use in Nanfen was 208.08 km2, 169.95 km2, 149.51 km2 and 91.46 km2, respectively, and the areas of most suitable area were more than the area occupied by current residential land (48.85 km2, However, current residential land-use located in the most suitable was only 9.05 km2, and which located in sub suitable, barely suitable and unsuitable area was 12.57 km2, 15.7 km2 and 11.53 km2, respectively, which revealed layout for residential land was not reasonable in Nanfen. Spatially, the most suitable areas were mainly distributed in Sishanling town, and sub suitable, barely suitable and unsuitable areas were chiefly located in Xiamatang town, which were all conflicting with current distribution of local residence. Residential land in Nanfen should be unified and reallocated to better local resident's living environment. © Copyright 2016 American Scientific Publishers All rights reserved.