Recent decades in the Lancang River Basin have witnessed extensive construction of hydropower dams, profoundly impacting the local environment. Utilizing high-precision satellite data, we conducted a comprehensive analysis of vegetation cover and carbon emissions, integrating data-driven time series and spatial analysis models to capture both temporal and spatial dynamics. Our findings reveal that hydropower dam construction in the Lancang River Basin has significantly promoted vegetation restoration and growth, concurrently facilitating a reduction in regional carbon emissions. Employing deep learning models for time-series prediction, we observed a substantial increase in the sum of the local normalized difference vegetation index (NDVI) post-construction, with an average rise of from 16.15% to a maximum of 20.12% during the pivotal hydropower dams’ operational phase. Between 2001 and 2020, the construction of hydropower dams in the basin corresponded to notable changes in ecological and carbon metrics. Specifically, vegetation cover expansion intensity (VCEI) reversed from a negative mean of −0.009 to a positive mean of 0.008. Additionally, the carbon emission intensity (CEI) around these dams drastically reduced, shifting from an average of 0.877 to 0.052. Importantly, the Global Moran’s I for VCEI significantly increased from 0.288 pre-2016 to 0.679 post-2015, reflecting a stronger spatial autocorrelation in vegetation patterns. Accordingly, these findings illustrate the complex interplay between hydropower dams and environmental outcomes, underscoring the critical role of pivotal hydropower dam construction in ecological improvement. The research results have improved and complemented those of previous studies on the environmental impact of hydraulic engineering, providing valuable insights for the construction management and policy formulation of hydropower dams in other similar river basins around the world.