Based on the ecosystem classification and ecological parameter data, the structure and dominant services, including sediment retention and water supply, of grassland ecosystem in Northern Shaanxi Province from 2000 to 2010, which was a key period to the Grain to Green Program, were evaluated by using the integrated valuation of ecosystem services and tradeoffs (InVEST ) model. The impacts of human activities on the ecological construction of grassland area and its ecosystem service function were clarified. The results indicated that the area of grassland ecosystem in the loess gully region of Yan’an and Yulin Cities was increased significantly, especially in steppe and scrub-grass, which showed a greening trend of the low-cover vegetation to medium-cover vegetation. During the study periods, the function of sediment retention for each types of grassland was improved and the steppe was the major contributor for sediment retention, followed by scrub-grass and sparse grass. As to the water supply, each types of grassland exhibited the tendency of decreasing firstly and then increasing. The restoration of sparse grass in north of the Great Wall of Northern Shaanxi had great value to the construction of energy and chemical industry base, and the maintenance of urban ecological security as well as the sustainable development of farming and animal husbandry. The results provided scientific basis of the major ecological construction, the sustainable development of agriculture and animal husbandry in grassland ecosystem.