To expand urban area and protect farmland effectively, Hilltop Removing and Gulley Filling Projects (HRGFP) in the river-valley city of Lanzhou, China have been carried out over the last decades. However, monitoring the dynamic characteristic and scale of the projects and the impact on the local eco-environment caused by HRGFP is necessary. Here, we conducted field investigations and used aerial remote sensing images and the Spatial Expansion Intensity Index (SEII), Terrain Niche Index (TNI), Biophysical Composition Index (BCI), and Remote Sensing Environment Index (RSEI) to monitor the dynamic characteristics of new plots and changes in the local environment. The total area of the new plots from HRGFP around Lanzhou was about 203.18km2 in 1989–2016 with a continuous shift away from the urban area to the low hills, gentle slopes, and gullies in the north, which has greatly enlarged the urban area and increased economic development. We found that the new plots were converted to new forest and grassland in addition to buildings. RSEI indicated that the environment quality improved in 3984 km2 of the study area, or 55.73% of the total area, after a short period of degradation. Our results indicated that HRGFP in Lanzhou have enlarged the urban area and increased economic development, and improved environment under the guidance of the local government.