In recent years, with the river basin water pollution worsening, the conflict of interest between the upstream and downstream of the basin is increasingly clear. Ecological compensation of river basin has become an important way to coordinate the conflict of interest between upstream and downstream in the river basin. At present, China’s research and practice of ecological compensation is still in the exploratory stage, The practice of river basin ecological compensation has been carried out in some areas of China, and has made some achievements, but there are still many problems in the specific implementation. River basin ecological compensation standard calculation and compensation mechanism is aim to explore in this thesis. The theoretical basis of river basin ecological compensation was analyzed, and the calculation scope and methods were established based on the marginal cost - effective, input - output accounting methods and a water ecological compensation standard accounting framework and methodology was built. Dahuofang Reservoir was taken as an example to carry out river basin ecological compensation empirical research on important water source area. The Dahuofang reservoir is one of China’s nine major drinking water sources, and is the drinking water source for nearly 23 million people living in seven cities: Shenyang, Fushun, Liaoyang, Anshan, Yingkou, Panjin, and Dalian. Upstream of the reservoir area provides a large amount of long-term input for the construction of water conservation forest and ecological protection, that leads to the income reduction of the famers 我ho lives within the reservoir area, limited the economic development, and restricted the fiscal growth rate of the local government, affecting the enthusiasm of the Upstream in water resources protection. So it is crucial to carry out ecological compensation research, with the establishment of a long-term ecological compensation, to mobilize the enthusiasm from water source protection part, to ensure the safety of main water source. The results showed that: the Dahuofang Reservoir upstream area has been resulted in enormous direct costs and the development of socio-economic constraints due to ecological construction and environmental protection. Those 3 upstream counties, Qingyuan, Xinbin and Fushun, are all at the low end of the primary industry, secondary industry and financial income list among all 16 counties in 7 cities. The establishment of appropriate ecological compensation mechanism for the protection of regional water quantity and quality safety and long-term stable operation is necessary and urgent. Conservation forests effective economic compensation accounting results that the minimum amount of compensation should be 286.76 million yuan/year; restrictive production effective compensation should be 158.69 million yuan/year; the compensation of construction of pollution control facilities fee should be 105.08 million yuan, operating costs should be 557 million/year; total ecological compensation should be 556.1 million yuan/year (including a one-time facility fee compensation costs). Total ecological compensation of the such benefit cities: Shenyang, 124.96 million yuan; Dalian, 68.79 million yuan; Anshan, 51.36 million yuan; Fushun for 30.69 million yuan; Yingkou, 45.97 million yuan; Liaoyang for 58.49 million yuan; Panjin, 129.44 million yuan. Finally, water source implementation of ecological compensation mechanism was designed on the basis of funds, payment methods, coordination mode, supervision, management and policy protection, and the corresponding countermeasures and suggestions were proposed.