Abstract: With the increasing importance of characteristic small town in urban and rural development strategies, assessing their development potential is becoming an academic hotspot. The study introduces the theory of push and pull and establishes a model of town's development dynamics, including 'push' 'pull' and 'elasticity' based on which an evaluation system is constructed to evaluate the development potential of 12 national characteristic small towns in Inner Mongolia. The results show that: the development potential of Inner Mongolia's characteristic small towns is uneven, with Xinchengzi and Tumultai belonging to the level III towns with the lowest potential, while the other 10 towns have specific or higher development potential, and Hantai is the highest potential score. The indicators affecting the development potential of the towns are concentrated in the push and pull areas, where the weak foundation of the towns constrains their development. While adhering to the characteristic development of its own industry and resource endowment and strengthening the connection with the external environment, consolidating the foundation of villages and towns to improve the degree of development is the main direction of small towns with characteristics in Inner Mongolia. The study provides a basis for developing differentiated sustainable development paths for characteristic small towns.