Land use and land cover change (LUCC) and its spatio-temporal characteristics are essential for natural resource management and sustainable development. LUCC is one of the major factors that affect the ecosystem and the services it provides. In this study, we used remote sensing techniques and a geographical information system to extract the land cover categories based on the Object-Based Image Analysis (OBIA) technique from Landsat TM/ETM/OLI satellite images in the transboundary Karnali River Basin (KRB, China and Nepal) of central Himalayas from 2000 to 2017. Spatio-temporal integrated methodology—Tupu was used to spatially show the LUCC as well as spatial characteristics of the arisen Tupu and shrunken Tupu. In addition, the ecosystem services value (ESV) were obtained and analyzed for each land cover category. In 2017, forest covered the highest area (33.45%) followed by bare area (30.3%), shrub/grassland (18.49%), agriculture (13.12%), snow/ice (4.32%), waterbody (0.3%) and built-up area (0.04%) in the KRB. From 2000 to 2017, the areas of forest, waterbody and snow/ice have decreased by 0.59, 6.14, and 1072.1 km2, respectively. Meanwhile, the areas of shrub/grassland, agriculture, barren land, and built-up categories have increased by 82.21, 1.44, 991.97, and 3.11 km2, respectively. These changes in the land cover have led to an increase in the ESV of the basin, especially the increase in shrub/grassland, agriculture, and water bodies (in the higher elevation). The total ESV of the basin was increased by $1.59 × 106 from 2000 to 2017. Anthropogenic factors together with natural phenomena drive LUCC in the basin and thus the ESV. The findings of this study could facilitate the basin-level policy formulation to guide future conservation and development management interventions.