In order to reduce the difficulty of the Internet of Things intelligent environment system to provide users with layout services and optimize the system structure, this paper proposes to design a context-aware service system based on the user interaction mode of the Internet of Things. This article first collected a large amount of data through the literature survey method, which laid a sufficient theoretical foundation for the subsequent research; then, using smart sensors, smart interaction technology, and context awareness methods is employed to design and build a context-aware service system based on the user interaction modality of the Internet of Things; in order to test the performance and effect of the situational awareness system, take the elderly home care behavior as the research object, collect the 28-day home behavior of the elderly as sample data, and divide it into 7-day data, 14-day data, 21-day data, and 28-day data, by adopting rule pruning demand reasoning algorithm and evidence theory algorithm to reason about the service demand of the elderly. Finally, the experimental results show that the rule-pruning-based service demand reasoning algorithm combined with the evidence theory algorithm optimizes the system, which can better perceive the situation of the elderly living alone and can well reason about the elderly’s service demand, which is of great significance for solving the life and safety problems of the elderly.