[Objective] The effect of reverting farmland to forest project in Northwest China on grain production and farmers'income was assessed to provide bases for the effectiveness and feasibility of the project implementation in the northwest area. [Methods] Data of reverted area of farmland to forest, grain sown acreage, grain yield, farmers'net income, runoff throughout the catchment of Yellow River, and soil erosion amount of northwest provinces(regions) were collected and used. Data was analyzed by SPSS and Excel software. [Results] The implementation of the project apparently resulted in the decrease of grain sown area and total grain yield, but the net income of farmers increased year by year in the northwest region. Returned area of farmland to forest and grain sown area, and grain yield were both negatively correlated, but reverted area was positively correlated with the net income of the farmers. Runoff throughout catchments of the Yellow River increased with the increase of the reverted area. Soil erosion decreased with the increase of the reverted acreage. [Conclusion] The ecological engineering project of returning farmland to forest has little effect on grain production in the northwest region of China. It can level up farmers'income and plays an important role in conserving soil and water and in improving regional ecological environment.