This paper identifies the forces that shape the settlement system in rural regions, describes the process of restructuring of the system, and presents a model simulating this process. It synthesizes concepts from many sources and forms a basic framework for further research. Rural settlement problems require more attention from researchers and research institutions. In the majority of countries in the world a considerable share of the population still lives in rural areas. This creates serious economic, social, cultural, and institutional problems. At present, there is very little literature that throws light upon such problems, and suggests programs for developing the rural settlement to suit modern conditions.