Small towns are regarded as an important carrier to promote China's new urbanization. Understanding the spatial characteristics of small towns in China has become an important issue. This paper explored spatial distribution pattern of small towns in China using the nearest neighbor distance, point density and other spatial analysis methods. In addition, the driving factors, including economy, population, location and natural environment, were analyzed. Our main results were summarized as follows: (1) From the perspective of the national level, spatial density of small towns in southeast China was higher than that in the northeast China. There were three clusters of small towns. The first one was the bow-shaped cluster, covering the Yangtze River Delta, Shandong Peninsula and Beijing-Tianjin-Hebei region. The second one was the inverted T-shaped cluster, covering the Pearl River Delta and central Hunan. The third one was a circle-shaped cluster, which was mainly distributed in the Chengdu-Chongqing region. (2) In addition to the clusters, small towns were mainly located along π-shaped belts, along the Lianyungang-Lanzhou Railway, the Yangtze River and the coastline. (3) From the perspective of regional level, small towns in most provincial-level units were evenly distributed. However, the gaps of spatial densities of small towns between different provinces were significant. (4) Only a few provincial-level units were characterized by the concentrated pattern of small towns, including the border provincial-level units and Sichuan province. (5) Spatial distribution of small towns was affected by multiple factors, including natural environment, population density, economic development level, location advantage, road traffic conditions and political factors. In the future, more preferential policies are suggested to enhance the development of small towns in northwest China. Small towns around urban clusters and provincial capitals should focus on improving the development quality. In the small towns located in agricultural areas, mountainous areas and remote rural areas, more attention should be paid to economic construction and enhancement of road accessibility. Our research aimed to promote development of small towns and accelerate the implementation of new urbanization and rural revitalization strategies.