Ecosystem services depend on the natural conditions of the background, and the level of social and economic development between regions makes obvious differences in the degree of natural land use, which leads to the spatial heterogeneity of ecosystem services. There is a spatial mismatch between the supply and demand of ecosystem services, which leads to a spillover effect of ecosystem services. Ecological compensation is a method that uses economic means to solve the ecological benefit externalities caused by the failure of market mechanisms and to maintain fairness in social development, which has been an effective countermeasure to solve the spillover effect of ecosystem services and an effective means to promote ecological protection and coordinate regional development. The theory and method of ecosystem services provide a scientific basis for formulating diversified ecological compensation policies, which obtained through the value of ecosystem services can maximize ecological benefits and is the best type of compensation in theory. In particular, the proposal and application of the theory of ecosystem service flow provides more scientific and technical support for the design of multilevel ecological compensation policies. Therefore, the scientific understanding of advantages and disadvantages of ecosystem services in solving the core issues of ecological compensation is of great significance for optimizing ecological compensation policies, which is also the research frontier and hot spot of ecology, geography and social economics. On the basis of comprehensive analysis of relevant domestic and foreign literature, this study summarized the research techniques and methods of ecological compensation based on ecosystem services and reviewed the progress and shortcomings of relevant researches and practical applications. The result points out that the current ecological compensation is mainly vertical compensation, and the horizontal compensation is rarely applied in practice. The application of ecosystem service flow to the formulation of ecological compensation has great potential, but the current researches still cannot meet the needs of the formulation of ecological compensation policy, and the exploration of the process mechanism of ecosystem service flow should be strengthened in the later research. The evaluation of the effect of ecological compensation policy is not enough, and it is necessary to improve the ecological compensation policy according to the compensation effect. In view of the core issues of ecological compensation, this study puts forward suggestions for future research and practice from the aspects of top-level design of ecological compensation policy, exploitation of ecosystem service application potential and exploration of ecosystem service flow process mechanism, and discusses future research ideas and directions, including the combination of ecosystem service flow and ecological compensation policy formulation. Finally, a process framework of ecological compensation policy formulation based on ecosystem services is designed with reference to the future research ideas and directions, which will provide theoretical and methodological reference for the later related research and help promote the theoretical development of ecological compensation and ecosystem services.