Watershed ecological compensation mainly focusing on water resources is an important component of current ecological compensation researches and practices.The research progress on theories and methods of watershed ecological compensation are summarized and some cases at home and abroad are collected and discussed.The compensation goal,approach,characteristics and effect of various compensation ways are compared and analyzed.On the basis of analysis,the key restriction factors in watershed compensation in China are analyzed and the suggestions are put forward in the aspects of policy,law and regulation,technology and method of watershed ecological compensation.