Profound social and physical changes have taken place in urban China since the economic reform in 1978. This study investigates the patterns and trends of urban residential area transitions and analyses the driving factors behind them. Through a detailed field survey and historical satellite imagery analysis in Chengdu, Sichuan Province, it was found that the basic urban residential unit went through a social and physical succession: from pre-1949 residential areas and work-unit compounds to commodity housing estates, then to city complexes during the last three decades. As the various kinds of residential areas coexisted during the transition period, the overall urban form appears as a mosaic-like pattern, with reduced regularity along a rural–urban gradient. The transitions were achieved at the expense of a huge loss of natural ecology and arable land and also led to overheating in the residential market. Concern is also raised about the vulnerability of living conditions in current urban China.