Based on the remote sensing and GIS technologies, with the in-situ investigation and ecological survey, the ecological system components and the transformation characteristics at different stages in the 5268 km2 area of upstream basin of Fenhe Reservoir were studied. According to the natural geography, hydrological and agricultural conditions, the effects of variations for different types of ecological system on water environment of the basin were analyzed. The results showed that: From 2000 to 2013, the main land use types at upstream of Fenhe reservoir were grassland, bushwood and forest, accounting for 80% of total area. Among them, the area of farmland was decreasing, while the area of forest, grassland, wetland and town was increasing; Grassland was the most stable land use type, and forest was the most active land use type. Forest and wetland were expanding spatially; The increase of forest and wetland area and the decrease of farmland area had positive effects on the basin environment. The increase of town area influenced the water environment negatively. In a word, the land use change in the upper reaches of Fenhe Reservoir improved the water environment.