Quantifying the intricate interplay between ecological restoration initiatives and their interactions with both the natural environment and various socio-economic factors is of immense importance. This understanding is crucial for fostering intrinsic development in ecologically vulnerable regions, as well as for enhancing the well-being of local residents. By delving into the mechanisms that drive this interplay, we can better comprehend how these initiatives can be optimized for the benefit of both the environment and the communities that depend on it. Utilizing the ecological conservation and restoration efforts of the Shan-shui initiative in the Yimeng Mountain area as a case study, this research aims to assess the project within the framework of sustainable livelihoods for the local inhabitants. The study quantifies the shifts in the livelihood activities of local residents before and after the implementation of the project. It also examines the principal factors that account for the disparities observed among different restoration units, thereby identifying the unique challenges and opportunities. Furthermore, this research devises targeted strategies aimed at bolstering the sustainability of residents' livelihoods in the context of these ecological initiatives. The results of this analysis reveal several key findings: (1) The ecological conservation and restoration initiative has had a profound impact on the livelihood strategies employed by residents in the area. Specifically, this initiative has facilitated a significant shift in their income structure, transitioning from a model predominantly reliant on active farming to one that is increasingly oriented towards labor-based and part-time work opportunities. In addition to this shift, the methods of agricultural production have undergone a transformation as well, evolving from traditional, labor-intensive practices to large-scale, intensive modern management techniques. This transition exhibits a broader change in the rural economy, moving away from traditional farming practices towards the development of ecological derivative economy. These types of economy include specialty planting and rural tourism, both of which are increasingly becoming vital components of the local economy. (2) Moreover, the ecological conservation and restoration endeavor has markedly enhanced the overall livelihood of the residents in the project area. The overall level of the residents' comprehensive livelihood has nearly doubled as a result of these efforts, with the degree of change varying slightly among different livelihood types. This variation can be observed in a descending order of impact as follows: livelihood environment, livelihood results, and livelihood capital. (3) While the ecological protection and restoration project has achieved remarkable results overall, it is important to note that the differences among various restoration units are particularly pronounced. For instance, the livelihood index is highest in those restoration units that boast diversified income sources, such as the main forest enhancement restoration unit. Conversely, the sustainability of livelihoods is found to be highest in units that have successfully developed ecological industries, exemplified by the water quality enhancement and pollution prevention unit. In stark contrast, the livelihood level remains low in those restoration units characterized by a single livelihood mode and limited resources, such as the primary abandoned mine restoration unit. An in-depth analysis of the diversity of livelihood types and the conditions of different restoration units will provide valuable insights that can aid in crafting tailored policies and management strategies. This nuanced approach will not only propel ecological restoration efforts to a higher standard but also expand their scope and deepen their impact. Ultimately, these efforts will provide crucial support for the achievement of sustainable development in the region, ensuring that both ecological and community needs are met in a harmonious and balanced manner.