Abstract: Watershed ecological compensation is an important environmental and economic policy to arouse the enthusiasm of all parties in water management and promote the improvement of water environment quality by economic means. During the "11th Five-Year Plan" period, the innovation of water environment management and the implementation of transboundary ecological compensation mechanism play a significant role in promoting the improvement of water environment in Shanxi Province. On the basis of combing and summing up the practice of transboundary ecological compensation policy of surface water implemented since 2009 in Shanxi Province, in the light of the requirements for the construction of ecological compensation mechanism in the reform of the ecological civilization system, drawing lessons from the advanced experience of Liaoning and Jiangsu Provinces, adhering to the principle of "inter-regional fairness, equal power and responsibility", we focus on the subject, object, standard, mode and other key elements of ecological compensation. According to the optimization direction and implementation requirements on the ecological compensation mechanism were put forward. The ecological compensation mechanism of water environment in Shanxi Province is established by optimizing the "upstream and downstream bidirectional" transversal ecological compensation mechanism, which is expected to provide a technical basis for further improving the level of water environment management in Shanxi Province.