ABSTRACT Ecotourism is a promising solution for channeling tourism revenues to promote nature conservation and poverty alleviation. However, vulnerable social-ecological conditions may limit the effects of ecotourism in dry rangelands around the world. This study implemented a paired experimental design to survey social-ecological impacts of ecotourism in Ergun grassland, one of China’s most commended ecotourism regions. Compared with livestock feeding business, local ecotourism achieved several sustainable development goals, such as providing income for local people, improving community cooperation, and raising conservation awareness. However, ecotourism caused the loss of forb species and subsequent decreases in ecosystem services. Therefore, ecotourism still had room for improvement in this region, considered the epitome for ecotourism in dry rangelands of China. Besides, climate change and adverse market conditions limited ecotourism to provide enough revenues for local people. Hence, it was better to integrate ecotourism and livestock feeding rather than replace livestock feeding with ecotourism in grassland conservation. In addition, although community-based ecotourism had showed its advantage in this region, it is out of the local community’s capacity to establish a fair market institution and build the necessary infrastructure. Further community engagement and multiple stakeholders’ cooperation are needed to ensure both better public services and vibrant communities.