Forest restoration is a vital nature-based solution for mitigating climate change and land degradation. To ensure restoration effectiveness, the costs and benefits of alternative restoration strategies (i.e., active restoration vs. natural regeneration) need to be evaluated. Existing studies generally focus on maximum restoration potential, neglecting the recovery potential achievable through natural regeneration processes, leading to incomplete understanding of the true benefits and doubts about the necessity of active restoration. In this study, we introduce a multi-stage framework incorporating both restoration and regeneration potential into prioritized planning for ecosystem restoration. We used the vegetated landscape of Hong Kong (covering 728 km2) as our study system due to its comprehensive fine-resolution data and unique history of vegetation recovery, making it an ideal candidate to demonstrate the importance of this concept and inspire further research. We analyzed vegetation recovery status (i.e., recovering, degrading, and stable) over the past decade based on the canopy height data derived from multi-temporal airborne LiDAR. We assessed natural regeneration potential and maximum restoration potential separately, producing spatially-explicit predictions. Our results show that 44.9% of Hong Kong's vegetated area has showed evidence of recovery, but remaining gains through natural regeneration are limited, constituting around 4% of what could be attained through active restoration. We further estimated restoration priority by maximizing the restoration gain. When prioritizing 5% of degraded areas, the increment in canopy height could be up to 10.9%. Collectively, our findings highlight the importance of integrating both restoration and regeneration potential into restoration planning. The proposed framework can aid policymakers and land managers in optimizing forest restoration options and promoting the protection and recovery of fragile ecosystems.