Abstract: Yunlong County, located in Dali Bai Ethnicity Autonomous State in the mountainous region of southwest China, which was used to be one of the concentrated salt-producing areas in Yunnan. Over the past two thousand years, the rise and fall of salt industry have profoundly affected the evolution of the local settlement system and rural development. Nevertheless, with the decline of the salt industry, the settlement system has gradually decentralized, which forced the rural areas to undergo an urgent transition. Based on the theory of Settlement Geography and Historic-Geographical Materialism, combined with historical literature and field survey, this study conducts a comprehensive and dynamic examination of the evolution modes and dynamic mechanism of the settlement system along the Yanma Ancient Road since the Han Dynasty. In this way, this study makes an effort to advance understanding of local social construction, economic industry, and cultural development in order to enrich the study of the history of the settlement system in the mountainous region of southwest China. Findings enabled it to be concluded that the local settlement system produced an industry-driven rural development path by fully utilizing the natural endowments, which evolved through the production, management, trade, and immigration of the salt industry. As a result, it created five distinct structural modes, that are independence, parallel bicentric distribution, hierarchical bicentric connection, monocentric and decentralization. Additionally, in order to resolve the conundrum, this study proposes a culture-leading strategy for the rural transition that caters to the perspective of cultural turn. More specifically, the growth of the salt industry resulted in the creation of numerous historical resources which have multiple cultural values and are crucial for rural development. Thus, the settlement system will be reshaped by focusing on the salt industry culture to form a hierarchical, diversified and networked development pattern to realize rural revitalization.