In China, central towns are an important pitch point in the urban system of a city or county. The cultivation and development of central towns is significant in completing the urban system structure and improving the overall quality of urban-rural development of a city or county. In the Municipality of Shiyan, a mountainous region in Hubei Province, the designation of central towns should not be mechanically accomplished through applying the methodology used in plain areas, but with particular focus on the location and transportation of the towns. Based on the analysis of comprehensive development potential, 14 central towns are finally designated in Shiyan in view of their favorable location and the requirement of coordinated regional development. Development strategies are also proposed for them which include the improvement of urban functions, the differentiation of development modes, the growth of industrial clusters, the development of environmental-friendly industries, the standard configuration of public service facilities, and the institutional reform and innovation which would ensure the realization of the central towns’ function of agglomeration and radiation. In China, central towns are an important pitch point in the urban system of a city or county. The cultivation and development of central towns is significant in completing the urban system structure and improving the overall quality of urban-rural development of a city or county In the Municipality of Shiyan, a mountainous region in Hubei Province, the designation of Central towns should not be mechanically accomplished through applying the methodology used in plain areas, but with particular focus on the location and transportation of the towns. Based on the analysis of comprehensive development potential, 14 central towns are finally designated in Shiyan in view of their favorable location and the requirement of coordinated regional development. Development strategies are also proposed for these include the improvement of urban functions, the differentiation of development modes, the growth of industrial clusters, the development of environmental-friendly industries, the standa rd configuration of public service facilities, and the institutional reform and innovation which would ensure the realization of the central towns’ function of agglomeration and radiation.