In order to restore degraded grasslands in the agro-pastoral transitional zone in north China, the central government initiated the Prohibited Grazing Policy (PGP) in these areas from the early 2000s. Since the initiation of this policy, it has significantly influenced participants' production and lives. Therefore,the research on the influencing factors of farmers' subjective well-being in these areas, particularly the impact of income and PGP perception on subjective well-being could provide theoretical support for the better implementation of the policies, and it could also provide more support for building a happy life and happy countryside. This paper presents an analysis of survey data from Yanchi County which is a typical agro-pastoral transitional zone in north China using Ordinary Least Squares (OLS) regression model and quantile regression model to explore the factors influencing farmers' life satisfaction. The results showed that:(1) self-reported relative income, self-reported financial balance, PGP satisfaction, self-reported influence of PGP on income, the frequency of participating in social activities and environment satisfaction have significantly positive effects on farmers' life satisfaction. (2) The positive impacts of self-reported relative income, self-reported financial balance and PGP satisfaction are declining with the rising quantiles of life satisfaction, and self-reported influence of PGP on income has a significantly positive effect on life satisfaction only in the median of life satisfaction. The frequency of participating in social activities has no significantly positive effect on the life satisfaction with low life satisfaction quantile, and the environmental satisfaction has a significantly positive effect only with upper quantile of life satisfaction. (3) Higher life satisfaction could make farmers more supportive and willing to participate in the policy. Therefore, it is necessary to continue to improve the existing eco-compensation policy, ecological environment and the subjective well-being of rural residents, thus to promote the sustainable development of society in the agro-pastoral transitional zone in north China.