Based on an analysis of urban system equilibrium of a ring-radial city, a decision model for investing in urban ring rail transit lines is proposed. In the proposed model, the interactions among different parties in the urban system are considered. The local authorities determine the optimal location and number of the ring rail lines, and the optimal frequency of vehicles on the rail transit lines to maximize the social welfare of the system. The households choose residential locations and housing space to maximize their own utility. The property developers seek to maximize their own net profit by determining the housing supply. The commuters choose the routes with minimum travel cost for commute. The findings show that the investment in ring rail lines will expand the total area of the city and cause the “peaks” of residential density, housing price, and investment intensity to appear on the ring rail lines, but the “valleys” of household housing space to appear on the ring rail lines. The investment in the ring rail lines benefit to both of urban residents and the urban system. The average residential density, average housing price, average land value, and average investment intensity decrease, whereas the average housing area increases. In addition, the construction cost of the rail transit lines has significant effects on the investment decisions of the ring rail transit lines.