The impact of urban growth on eco-environment leading to global climate change has attracted great concern. In this research, we use NetLogo, a cellular automation based software, to simulate the development process of Danshuei from an original settlement to a highly developed satellite town of the Taipei Metropolitan area, Taiwan. The study area is a good case showing how to balance between urban development and natural resource protection. The model is validated against the official data extracted from National Land Use Survey of 2008. Four specific scenarios, which have different rules for urban development and strategies for natural resource conservation, are used to simulate the spatial pattern of urban growth. The first scenario simulates the urban growth using slope factor only. The outcome reveals that the areas with lower slope obtain higher potential for urban development. Following the first scenario, the second scenario adds neighbor effect and road gravity as the development rules in the model. The third and fourth scenarios assume a managed growth with moderate and restricted protection of natural resources respectively. The result demonstrates that restricted control could avoid from dramatic loss of forest and agricultural areas.