Quantifying economic losses resulting from grassland degradation represents a critical focus within ecological economics. This study employs an economic loss assessment model to evaluate the scale of degradation-induced losses across varying severity levels in Ujimqin Banner and identifies their primary drivers. Key findings reveal: (1) By 2023, degraded grassland in Ujimqin Banner covered 828,000 hectares, comprising mildly (428,000 hectares; 28.3%), moderately (266,000 hectares; 17.6%), and severely (134,000 hectares; 8.8%) degraded areas. Crucially, degradation remained below irreversible thresholds. (2) Total ecological-economic losses reached CNY 2.623 billion, driven by ecosystem service value losses (CNY 1.498 billion) and direct losses from reduced forage yield (CNY 1.125 billion). Severely degraded grassland exhibited the highest per-hectare loss (CNY 3,680/ha), while moderately degraded areas contributed the largest share of aggregate losses (39.7%). Forage yield per unit area, degraded area extent, and market prices emerged as the dominant drivers. (3) Losses displayed significant spatial clustering, with high-loss zones concentrated in the northeast, central-west, and south, predominantly linked to anthropogenic pressures. This supports implementing zonal management strategies prioritizing prevention and control. By rigorously quantifying grassland degradation costs and their spatial heterogeneity, this research provides a scientific foundation for ecosystem valuation and strategic management decisions.