The grassland on the Northern Tibetan Plateau is an important livestock production base and ecological safety barrier in China. This paper uses the grassland ecosystem in Shenza County in a case study to establish an evaluation index system in order to monitor grassland degradation using remote sensing images (TM, ETM+, and CBERS in 1990, 2000, 2010) based on the landscape ecology, natural geography, and social economy of this region. The degradation of Shenza County grassland has been investigated over the past two decades through the interpretation of grass coverage information. The value loss of eight grassland ecosystem services was evaluated using models of ecological economics. The results show that the vegetation coverage of Shenza County changed significantly from 1990 to 2010. Grassland degradation has increasingly expanded, with moderate to severe degradation accounting for the largest proportion of the degradation. In 1990, the total area of degraded grassland was 62.07×10⁴ hm², with light degradation accounting for 18.71%, and moderate and severe degradation accounting for 10.97% and 7.45%, respectively. In 2000, the total area of grassland degradation covered 126.86×10⁴ hm², of which light degradation accounted for 34.46%, and moderate and severe degradation accounted for 33.02% and 12.20%, respectively. In 2010, the total area of grassland degradation was 109.47×10⁴ hm², with light degradation accounting for 40.02%, and moderate and severe degradation accounting for 22.19% and 8.08%, respectively.Grassland degradation was intensified in the period from 1990 to 2000, with the total degradation increasing by 64.79×10⁴ hm², of which light degradation accounted for 23.58×10⁴ hm², and moderately and severely degraded grassland accounted for 34.23×10⁴ hm² and 6.98×10⁴ hm², respectively, compared to the areas recorded in 1990. From 2000 to 2010, grassland degradation decreased by 17.39×10⁴ hm². Within this, lightly degraded grassland increased by 7.46×10⁴ hm², while moderately degraded and heavily degraded areas decreased by 18.01×10⁴ hm² and 6.84×10⁴ hm², respectively. The above analyses indicate that the grassland in Shenza County degraded between 1990 and 2000, and underwent gradual recovery from 2000 to 2010.The value of ecosystem services declined gradually during the period from 1990 to 2010, by 59.02×10⁸ Yuan in 1990, 52.14×10⁸ Yuan in 2000, and 53.82×10⁸ Yuan in 2010. The total value of the ecological services of the Shenza County grassland decreased by 5.20×10⁸ Yuan from 1990 to 2010, which included the values of the grass biomass services decreasing by 0.27×10⁸ Yuan, carbon storage and oxygen release decreasing by 0.36×10⁸ Yuan, nutrient cycle decreasing by 0.33×10⁸ Yuan, wind-breaking and sand fixation decreasing by 3.32×10⁸ Yuan, and biodiversity decreasing by 0.70×10⁸ Yuan. The value of water conservation, wind-breaking and sand fixation, and the biodiversity conservation account for the largest proportion, about 78% of the total value. The functional value of the ecosystem services decreased by 6.88×10⁸ Yuan from 1990 to 2000, and increased by 1.68×10⁸ Yuan from 2000 to 2010. Grassland degradation was significant, and the loss of ecosystem services peaked during the period from 1990 to 2000. The value of ecosystem services increased gradually from 2000 to 2010 because of the implementation of measures for environmental protection. However, the biomass value of the Northern Tibetan grassland accounts for only 7.00% of the ecosystem services the area provides. It is expected that grassland management carried out with attention paid to the functioning of ecosystem services will allow for sustainable development.