China implemented the South to North Water Division Project (SNWDP) in 2002, and the three-route (i.e., East, Middle, and West) Project is capable of transferring a total of 41.3 billion m3 of water annually from the water rich Yangtze River to the drought Northern China. The upper Han River basin is the water source area of the SNWDP’s Middle Route, thus its aquatic ecosystem and water quality is of great concern. Field surveys and estimated soil erosion concerned with morphological properties from digital terrain model and land use/land cover were conducted and water quality variables were examined in April and October 2006 respectively in order to determine the major eco-environmental consequences such as land use and soil erosion, water pollution and building of hydropower dams in the basin. Hydroclimatologic data from Ankang and Danjiangkou demonstrated temperature rise of 0.29 °C/10 a, and significantly decreases of precipitation and runoff (78×108 m3/10 a) in the recent 30 years. The upper Han River catchment with an erosion intensity of 1980-4400 t/km2/yr, transported 3×108 t/yr of soils to the river, and 40% of the riparian zone in some sub catchment was cultivated though the entire basin had a vegetated coverage of 77%. Moreover, chemical oxygen demand (COD) and nitrogen were the major pollutants in the upper Han River with considerably increases in the past 40 years, which would be further exaggerated by dam construction and global warming. Ultimately, corresponding strategies including proper land use, water pollution control, ecologically sustainable management for hydropower station and establishment of eco-environmental monitoring network were introduced for maintaining a scientifically sound aquatic ecosystem and satisfactory water quality in the upper Han River for the interbasin water transfer project.