Abstract: In view of the dilemma of inheritance and translation in the current traditional settlement space construction, this research sorts out again the organizational modes and internal ethical functions of traditional settlement space by referring to the structural system logic of linguistics and the psychological cognitive mode of schema. Based on Noam Chomsky’s transformational generative grammar logic, it proposes a research path to rediscover the traditional settlement space construction system in the contemporary context. By applying the structuralist cognitive logic of linguistics, it leads traditional settlements cultural space from physical representation of the carrier to structural thinking of the living environment. By referring to the expression form of spatial schema language, it analyzes the scale, structure, order and significance of the whole settlement space, and reveals the formation mechanism and construction wisdom of the settlement space. Based on the three major systems of lexical elements, syntactic structure and context rules, it constructs settlement spatial vocabulary and grammatical logic system under the multi-dimensional nesting of micro–meso–macro scales. Based on the “space–path” basic spatial grammar structure, it translates the traditional settlement space into a new spatial structure to meet the new spatial functional requirements. On the horizontal dimension, it combines the typological units of the spatial vocabulary on a single dimension according to linguistic morphology and syntax to form a spatial lexicon. On the vertical dimension, it folds the multi-dimensional lexical units and nests them into a compound material space structure according to the context restriction rules of the linguistic grammar. Therefore, the research has constructed a cognitive system of spatial schema language structure and translation generation method to provide a new cognitive perspective for the construction and reconstruction of traditional settlement space.