Setting scientifically reasonable target of vegetation restoration, formulating appropriate and feasible restoration strategies, and maximizing the carbon sequestration benefits of vegetation restoration are of utmost importance in improving the effectiveness of ecological restoration. In this paper, we focused on a key ecological function area of the water conservation area of the upper Yellow River Basin. The Improved Integrated Biosphere Simulator (IBIS_i) model was used to simulate the potential vegetation state under the average climatic condition of the last ten years by using the current actual vegetation state as the boundary condition. And the short-term reasonable target of vegetation restoration in the study area was set based on the net primary productivity in the potential vegetation state, and the potential improvement of carbon sequestration due to vegetation restoration was then estimated. On the basis of this, priority areas were identified by assessing the degree of damage to the vegetation, and the vegetation restoration strategies for different regions were classified based on the analysis of the ecological resilience and the trend of the actual vegetation change. The results showed that: (1) The average restoration target value for vegetation net primary productivity in the water conservation area of the upper Yellow River Basin was 295.4 gC m^-2 a^-1, with a potential increase of 7.18% over the current vegetation status. (2) Under the current restoration target, the potential improvement of carbon sequestration in the study area had obviously spatial variability. The areas with significant carbon sequestration potential through vegetation restoration were mainly distributed in the areas above the Longyangxia reservoir and the upper Tao River-Daxia River Basin, accounting for about 60% of the total area. (3) The vegetation restoration strategy in the study area should prioritize conservation and natural restoration. Meanwhile, for key restoration regions such as the northern bank of the Yellow River above the Jimai hydrological station, the Gonghe Basin, the Longyangxia reservoir area, the Guinan sand, and some areas of the Yellow River-Huangshui River valley, the implementation of supplementary artificial restoration measures should effectively support the restoration process. The research findings can provide a scientific basis and decision support for locally tailored vegetation restoration measures, enabling them to be conducted in an appropriate and context-specific manner. In addition, the study can provide valuable insights and methodological references for ecological restoration planning in other regions.