Watershed is an important and united unit of ecological compensation. Watershed ecological compensation is one of the main components of ecological compensation, and implementation of watershed ecological protection can best reflect the integrity of ecosystems and the ecological elements of a comprehensive nature. Watershed eco-compensation mechanism is the forefront of the current ecological and economic research propositions. In this paper, we sort out the domestic and international progress in watershed eco-compensation study, based on the current watershed eco-compensation research and summary of the main problems; combination of watershed eco-compensation mechanism, the compensation standard of assessment methods and means of compensation are two main research questions commentary, in-depth analysis of watershed eco-compensation mechanism innovation, design theory grounded, focused and operable, can achieve long-term, sustainable eco-system of the importance of compensation system. Considering to the water right and water market, the social management of the watershed and cost-benefit of the compensation the trend of watershed compensation were put forward.