The conflicts between ecological sustainability and economic development are difficult to resolve, especially in poverty-stricken rural areas. Unfortunately, extreme poverty and biodiversity hotspots are often geographically coincident. Here, we selected the Jinshui watershed, a biodiversity hotspot in China’s Qinling Mountains, to study the sustainability of the social–ecological systems under conservation projects, i.e., establishment of the Foping National Nature Reserve (FNNP) in 1978 and implementation of the Natural Forest Conservation Program (NFCP) and the ‘Grain-for-Green’ Program (GGP) since 2000. We analyzed land use/land cover change using remotely sensed Landsat MSS/TM/ETM imagery obtained in the growing season of 1978, 1994, 2000, and 2007. We also collected information on the population of giant panda (Ailuropoda melanoleuca, one of the world’s most recognized flagship species for conservation) in the FNNP, socio-economic circumstances, and local farmers’ attitudes and perceptions. The results showed that the conservation projects had effectively protected the existing forests, facilitated vegetation recovery and economic development, and meanwhile the giant panda population in the FNNP had considerably increased. Farmers living in zones with varying human disturbance intensities generally showed similarly positive attitudes towards the GGP. In the slightly- and moderately-disturbed zones, most farmers showed positive perceptions to environmental changes after the GGP, but the perceptions of most farmers in the intensely-disturbed zone were negative. Our findings have important implications for restoration/conservation projects, especially in poverty-stricken rural areas in developing countries.