Research on land cover change with different definition of the Yellow River headwaters region is of great significance.But there was no unified definition of the Yellow River headwaters region.Different definition made different result.The land cover condition in the Yellow River headwaters region derived from Digital Elevation Model (DEM) was adopted to explore its changes during three periods,i.e.1970s to late 1980s,late 1980s to 2004 and 2004 to 2008.The outlet of watershed used in this paper was Jimai hydrologic station in order to minimize climate effect.The mathematical index was used to study the ecological effect of grassland degradation quantificationally.In this paper we discussed the direction and extent of land cover changes over the past 30 years with the method of transfer matrix; then it analyzed the land cover condition index and land cover change index,to detect the ecosystem function variance owing to land cover change in the Yellow River headwaters region.The land cover condition index considered only the main factors which were of great importance on ecosystem functions,such as forestry shrub,high coverage of grassland,water body and swamp.It assumed that these four land cover types were of better ecosystem services.The present state of land cover was listed at the very beginning of the result.The dominant land cover type was grass,which was better than that in the Three-River Headwaters Region during all the four periods.The land cover condition was degrading from 1970 to 2004,and fluctuating greatly in different periods,and restoring ever since 2004.The macro ecosystem condition,which was described by land cover change index,experienced a course of melioration,i.e.slow restoration in the Yellow River headwaters region from 1970s to 2008.The grass land condition has been becoming better ever since the ecological conservancy project was executed from 2004.Climate change influenced the degradation of grassland greatly,but the ecological restoration made some positive effects on ecological evolution.