The situation of water resources and environment of watersheds in China is severe with the rapid development of urbanization and industrialization. It is urgent to designate watershed eco-red line for comprehensive management. The watershed eco-red line management system is suggested in order to solve the predicament. The following approaches are proposed: completing the laws and regulations on watershed eco-red line, establishing the management mechanism of watershed eco-red line in different regions at different levels, intensifying the target evaluation for watershed eco-function, implementing the watershed eco-compensation at all reaches, and completing the monitoring network of watershed eco-environment.