The Yarlung Zangbo River Basin is the core area for traditional Xizang villages. The fragile ecological background of the plateau and its unique natural environment together shape the spatial differentiation characteristics of the human settlement environment in this region. Existing studies lack analyses that link suitability and settlement spatial patterns from the perspective of factor coupling, making it difficult to support differentiated protection of traditional villages within the basin. This paper constructs an evaluation system for the habitability of traditional villages in the basin, aiming to provide a scientific basis for the protection and sustainable development of traditional villages in plateau areas. Twelve natural and social indicators, including topography, climate, hydrology, ecology, and population, are selected, and the weighted sum method is used for weighting. The habitability of 38 nationally recognized traditional villages within the basin is evaluated, the spatial distribution patterns of traditional villages are further analyzed, and factor significance testing is conducted to identify key factors influencing the differentiation of the human settlement environment. The research results indicate that traditional villages within the basin generally exhibit a cohesive spatial distribution pattern, with human settlement suitability decreasing from east to west. Elevation, precipitation, and forest coverage are the main factors driving differentiation in human settlements, while social factors only play a local auxiliary role. The suitability of the human settlement environment is generally coupled with the spatial pattern of settlements, yet there is local spatial mismatch, resulting in a unique spatial pattern characterized by high suitability but low aggregation in the downstream areas. This study clarifies the differentiation characteristics and driving mechanisms of the human settlement environment of traditional villages in the Yarlung Zangbo River Basin, providing theoretical support for the regional protection of traditional villages and the optimization of human settlement quality within the basin.