The resettled community is a special type of transitional community in China where the residents are urbanized peasants who lost their lands during urbanization development. However, resettled community conflicts (RCCs) are barriers to sustainable community transformation. Focusing on functional conflict, this study identified the conflicts in the resettled community and proposed feasible governance logic for RCCs. The research in this article has a significant theoretical foundation in functional conflict theory. By examining a large sample of cases, seven RCC types were identified (e.g., inner discontent of residents, mass incidents), of which three have positive functions and four have negative impacts. Furthermore, three RCC causes were identified: right-based, interest-based, and value-based conflicts. Their mechanisms for the conflict function are, respectively, the contextual dual-functional, destructive one-way, and structural dual-functional paths. Considering these findings, we propose a dual governance logic of RCC: accommodation and avoidance. Within the dual logic, specific governance strategies are proposed for the different RCC causes and their functional formation paths. This research serves as an important reference for proper policy measures to govern RCCs and promote the sustainable transformation of resettled communities. The methodology adopted can be extended to the study of RCC in broader global contexts.