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As a key indicator for assessing the sustainability of a region, the suitability of the environment for human settlements has a considerable impact on the quality of human life and the level of social development. Using Lincang, a typical mountainous city in southwest China, as an example, a comprehensive evaluation of the environmental suitability for human settlements in Lincang during 2020 was conducted using multiple data sources of data to construct a Human Environment Suitability Index (HESI). These data sources included DEM, Landsat remote sensing images, and POI. The results showed that the overall habitat suitability of Lincang was good, with 62.9% of the area classified as generally suitable or better, and the HESI index demonstrated an overall decreasing trend from southwest to northeast. The spatial variation in habitat suitability among counties in Lincang was remarkable, with an overall decreasing trend from built-up to non-built-up areas. Linxiang District had the highest HESI value (0.60), whereas Zhenkang County had the lowest HESI value (0.44). This research closely conformed to the development objectives of SDG11 and established a comprehensive evaluation index framework system for urban habitat suitability, with the aim of providing a scientific evaluation model for less-developed mountain cities in China to achieve sustainable transformation.