As a new function for the city, the recreational business district(RBD) has become an important part for the urban recreation system, offering tourism, recreation, entertainment and shopping for tourists, local residents and residents living in the peripheral areas. This paper is a case study of Tian He district, a newly developed RBD in Guangzhou, aiming at its formative mechanism based on the analysis of its formation and the characteristics of its development. Tian He district was not intended to be the RBD of the city. Its different parts are not the result of one plan. How ever, entertaining facilities were put up, intentionally or unintentionally, along with the construction of the business facilities. This helps to form the RBD in actual fact. At the moment, the combination of functions is completed with the biggest bookstore in the city, three stadiums, a sports center, Hong Cheng Commercial Plaza, Tian He Plaza and a large area of green field. This makes Tian He district the only one of its kind in both business and recreation. The formation and development of this RBD has been caused by the demand of the market. An analysis of the supply and demand reveals that the com petition in the market has resulted in the change of consumption patterns and the need for recreation, pushing toward the direction of a combination of business facilities, entertainment, activities with different themes and a friendly environment. The development of a recreational area and the recreational facilities must meet the threshold demand, as well as having a symbiotic relationship with people's activities and the space for entertainment. Therefore, the recreation industry needs to be combined with business needs. Urban tourism is becoming the most important industry in the service industry. Guangzhou is a commercial city, the modern business center of Southern china. I ts attraction lies in modernity and commercial culture. In order to become a famous tourist city for Guangzhou, Guangzhou needs to have a RBD as an attraction for its urban tourism. This would promote the image of the city and expand its regional impact. It was subjective and objective demand that has made Tian He District the RBD of Guangzhou City.