It has been a long time that two kinds of resident habitations and the corresponding administration systems have been present and functioning in Chinese cities and countries. In recent years, with the rapid development and expansion of city, many villages have been gradually incorporated into city zone and as a result villages in urban district, normally called in-city villages, come into being, which are sarcastically against the grain with all aspects of city zone. This paper studies the problem by the theory of dualistic structure of city and country, and analyzes the transition and causes from the point of view of city development, especially on the change process, i.e., from neighboring village to village which is half incorporated by city, and finally to the in-city village. For the purpose of illustration, investigates the causes of transition and engendering of in-city villages with respect to city expansion and village urbanization. The result of this study is anticipated to be of some significance to perform the full-scale city modernization and to establish a harmony society.