Because of the environment gradually worsening in the Yellow River water supply area of Ganan, Gansu Province impacting the ecological security of the yellow river system, it is necessary to find an ecological compensation mechanism. As the key link of the ecological compensation, the compensation mode should be paid more attention to. Based on the brief introduction to the compensation mode of the ecological compensation cases, using the questionnaire survey data, the compensation mode satisfied by the peasant and herdsman, the contribution of the compensation mode to the sustainability of the ecological compensation project and the livelihood capacity of the herdsman and peasant are analyzed. By these analyses, it is found that the peasant and herdsman do not satisfy the current compensation mode very much. Although more than the 40 percent peasant and the herdsman likes the cash compensation, but the compensation flow direction shows that the cash compensation is not favorable for sustainable development of the ecological compensation project and the capacity building. Focusing on the capacity building and the project sustainability, it is suggested that the capacity compensation mode should combine with the case/substance compensation mode in the Yellow River water supply areas of Ganan.