The people being moved out are from eight villages in Pingtang County, of Qiannan Buyi and Miao autonomous prefecture ahead of the completion of the facility in September.
FAST, the Five hundred meter, Aperture Spherical Telescope, is made of 4,450 panels.
Scientists have depicted it as a super-sensitive "ear", capable of spotting very weak messages - if there are any - from space, state-run Xinhua news agency reported.
A relocation budget of about 1.8 billion yuan (about USD 269 million) has come from the poverty relief fund and bank loans.
About a third of those being resettled are living under poverty line, and meet national requirements for resettlement, Jiang Xiaoxiang, deputy head of the Pingtang County said.
Over 600 apartments have been built in two new settlements, about 10 kilometers from their original homes.
The villagers will be compensated in cash, or with new housing.
Those who lost their lands will also be compensated, Jiang said.
Construction of the FAST began in March 2011 at a cost of 1.2 billion yuan.
Upon completion, the telescope will be the world's largest, overtaking Puerto Rico's 300-meter Arecibo Observatory.
Thetelescopewhich is aimed at observing deep space was stated to be most visible project of China's plans to transform into high-tech nation focussing on research in advanced science and technology moving away from cheap manufacturing.
The project has the potential to search for more strange objects to better understand the origin of the universe and boost the global hunt for extraterrestrial life,Zheng Xiaonian, deputy head of the National Astronomical Observation under the Chinese Academy of Sciences which built thetelescope, said.
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