Rapid urbanization in China has triggered the conversion of land from rural to urban use, particularly the conversion of rural settlements to town land. This conversion is the result of the joint effects of the geographic environment and agents involving the government, investors, and farmers. To understand the dynamic interaction dominated by agents and to predict the future landscape of town expansion, a small town land-planning model is proposed based on the integration of multi-agent systems (MAS) and cellular automata (CA). The MAS-CA model links the decision-making behaviors of agents with the neighbor effect of CA. The interaction rules are projected by analyzing the preference conflicts among agents. To better illustrate the effects of the geographic environment, neighborhood, and agent behavior, a comparative analysis between the CA and MAS-CA models in three different towns is presented, revealing interesting patterns in terms of quantity, spatial characteristics, and the coordinating process. The simulation of rural settlements conversion to town land through modeling agent decision and human-environment interaction is very useful for understanding the mechanisms of rural-urban land-use change in developing countries. This process can assist town planners in formulating appropriate development plans.