Understanding ecosystem service characteristics along urban-rural gradients is vital for enhancing the well-being of urban and rural residents. Despite this importance, prior research has neglected the dynamic evolution of urban-rural gradients during urbanization. This study investigates the spatiotemporal variations of four ecosystem services—habitat quality, carbon sequestration, water yield, and soil retention—along the urban-rural gradient in Jinghong City, China. We propose a method for identifying the gradient using the inverse S function of urban land density distribution and concentric analysis. From 2000 to 2020, ecosystem service supply capacity in Jinghong City continuously declined, indicating degradation over the two decades. The urban-rural gradient zone is classified as core area, inner urban area, suburban area, and urban periphery, each experiencing outward expansion, reflecting significant urbanization. Changes in ecosystem services along the gradient revealed consistently high losses in habitat quality, carbon sequestration, and overall services in the inner urban area, while water yield and soil retention suffered the greatest losses in the urban periphery. As urbanization expanded outward, the loss of these services shifted from the inner urban area to the suburban and urban periphery. These results support decision-making in urban planning and sustainable development for urban-rural regions.