With the rapid industrialization and urbanization, many villages and towns in China have experienced the phenomenon of “five problems” (non-agriculturalization of the economy, population ageing, rural settlement decay, rural environment pollution, and rural poverty), which has become a major constrain to the construction of a well-off society in China. For this reason, it is urgent to establish the theoretical foundations and a measurement system for evaluating resource and environmental carrying capacity of villages and towns. The evaluation will help village and town development to adapt to local conditions, make full use of local water and soil resources and environmental and ecological advantages, revitalize the rural economy, improve the village living environment, and enhance residents’ happiness. This article first reviewed the research context, application domains, and scale characteristics of carrying capacity. Taking the regional system of villages and towns as the research object, the concept of the carrying capacity of resources and environment in villages and towns was defined from a comprehensive and regional perspective. We also analyzed the connotation and extension of the resource and environmental carrying capacity of villages and towns. Based on the summary of different types of village and town development, the mutual feedback relationship between different types of village and town development and resources and environmental factors was analyzed, and the mechanism of influence of village and town resource and environmental carrying capacity was discussed. Finally, through the construction of an index system and a system model, the “shortcoming principle” was used to build the theoretical model of the measurement system for the resource and environmental carrying capacity of villages and towns. This study extends the theoretical system and assessment methods of carrying capacity of resources and the environment at the village and town level, and it also has some theoretical and practical significance for the program of rural revitalization in contemporary China.