The present study investigated the forest transition and fragmentation process using historical topographic maps and multi-temporal satellite images in the upstream region of Nenjiang River Basin, Northeast China from 1954 to 2010. Area-weighted centroid method, associated with the area-weighted mean patch fractal dimension (AWMPFD) and core area percentage of landscape (CPL), were used to estimate the spatial movement of forest as well as its spatial fragmentation process. The forest was further classified into high dense forest, low dense forest, and shrub forest to analyze the forest transition process, among these forest types or between forests and other landscape types. An obvious deforestation was observed during 1954–2000, with two different fragmentation processes in two periods: the first fragmentation process from 1954 to 1976 was mainly observed along the ecotone between forest and other landscape classes while the second fragmentation process from 1976 to 2000 was observed both in the ectone and interior area of forest patches. The afforestation process was observed during 2000–2010 due to the issue of a series of policies by the national and local government. GIS-based landscape index, coupled with socio-economic and political driving forces analysis, proved its unique value and effective in assessing landscape pattern and dynamics.