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Based on Landsat TM / ETM image data and some other survey materials, this paper analyzed the land use change in the upper and middle reaches of Heihe river basin during 2000-2010. Subsequently, two prominent functions of ecosystem service: water conservation and soil retention were evaluated, from upstream, midstream, as well as the whole region. The findings of this study are summarized as following: (1) The main types of land use is unused land accounting for more than 60% of the total area. In recent ten years, cultivated land, forest land and unused land increased dramatically. By contrast, grassland, water area and snow cover land decreased. (2) The increase of cultivated land was chiefly derived from the conversion of desert and grassland. Desertification on forest land, afforestation on desert and grassland happened at the same time. The total area of forest land showed an ascending trend. The loss of grassland was http: / / www.ecologica.cn attributed to the afforestation and desertification, whereas the increment of grassland was ascribed to the conversion from snow cover land and desert. The increase of unused land mainly came from the degradation on grassland. (3) On the whole, the degree of land use was relatively low and displayed a descending trend from the southeast to the northwest. In recent 10 years, the degree of land use dropped in upstream area and ascends in most of the middle reaches of Heihe basin. ( 4)Owing to the increase of forest land of the upper reaches, water conservation for soil improved significantly. Water storage in soil increased by 0.746伊10 8 t. (5) The total amount of soil retention raised from 1.860伊10 8 t to 1.899伊0 8 t as grassland conversion to forest. Under the background of climate change, some measures should be implemented in order to maintain the stability of the mountain鄄oasis鄄desert system and the sustainable of the ecosystem services like soil retention. Firstly, the area of artificial forest should be controlled in the upper reaches which can reduce transpiration and increase the amount of water available. Secondly, in the middle reaches, cultivated land area should be under control to ensure the ecological water consumption, such as grassland and wetlands.