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City livability is one of the development objectives of most cities in modern time. The assessment of city livability plays an important role to ensure a city's longterm development and lead a sustainable way of a city's planning and management. The key issues of assessing city livability, involving the assessment indicator system and the assessment method, are discussed in this paper. Based on the deep comprehend of city livability and literature review, a livability assessment indicator system, including 14 indices, is established. Combining with the statistic data of 18 cities in Shandong province, principle component analysis is applied to the indices of these cities to get an objective assessment of the city livability, the results of which basically tie in with the facts. The study on assessment of city livability is of high signification both academically and practically.