China's urbanization has entered the era of stock, and Urban Restoration has become an important means to promote the high-quality development of cities. In this context, this paper discusses the problems and Restoration methods of urban old area renewal in small and medium-sized cities in Zhejiang based on grey relational analysis. This paper selects several small and medium-sized urban renewal projects in Zhejiang Province as cases, and through grey relational analysis model, quantitatively evaluates the key influencing factors in urban old area renewal, and reveals the internal logic and action mechanism of urban old area renewal. The study finds that urban old area Restoration is not only a change of physical space, but also a complex feedback process on human behavioral patterns and social activities.