The Yanghe Watershed is located in a typical farming pastoral zone of North China. It is an important water-source conservation site and an ecological protection barrier for Beijing. Furthermore, the 2022 Winter Olympic Games will be held in Zhangjiakou City, which is a key region of the Yanghe Watershed. A study of land use changes and their ecosystem service-function values of the watershed can provide important theories for effective decision-making regarding water resource protection and environmental quality improvement in fields of the areas where the games will be held. ArcGIS was used to analyze remote sensing data of land-use changes that occurred within the Yanghe Watershed from 1990 to 2013, and ecosystem service-function values of the lands were estimated. The results showed that forest and unused lands within the watershed increased, whereas grassland and aquatic areas decreased during the study period. Based on absolute values of the changing rate of a single land-use type, apart from forestland, the other land-use types were more greatly affected by human or natural changes in 2000-2013 than in 1990-2000. Land transfers mainly occurred in Xihe, Yanggao, Tianzhen, Xuanhua, and Huailia Counties, and the land change degree and distribution increased in recent years. The annual value of total ecosystem service functions of the lands increased during 1990-2000 and decreased during 2000-2013; however, overall it decreased from 1990 to 2013. Service function values of grassland, aquatic areas, and farmland decreased, whereas that of forest and unused land increased during 1990-2013. Percentages of values of raw material production, climate regulation, air conditioning, biodiversity conservation, and esthetic landscape increased owing to increases of forestland within the watershed during the study period. Forest-, grass-, and farmlands were not only the main contributors but also sensitive factors to ecosystem service function values of the lands within the Yanghe Watershed from 1990 to 2013.