Clarifying the formation mechanism of poor settlements is the “pathological” basis for urban regeneration and poverty governance. On the basis of scientific determination of 155 poor settlements in Lanzhou City, this paper classified their type and analyzed the characteristics of their quantity distribution and density distribution. From the perspective of spatial and social interaction, and combined the internal factors and external factors, this paper put forwards the formation mechanism of poor settlements, namely, superposition of unit society collapse and physical environment degradation, interaction between differentiation of residents’ income and reform of housing institution, interweaving between urban discontinuous planning and jumping construction, coupling between passive urbanization and active urbanization, and derivation of lagged economic development and unique regional culture.