The Qinghai-Tibetan Plateau (QTP) has the world’s largest alpine grassland ecosystem. The QTP ecosystem is extremely fragile and suffers continuous degradation. An accurate determination of the status of alpine grassland is the first crucial step in monitoring its degradation. A novel method combining field survey with remote sensing information based on ecological indicators is proposed. The degradation classification of alpine grassland was identified by multivariate hierarchical analysis based on 270 field plots. The spatial pattern of alpine grassland degradation was mapped by determining remote sensing variables that corresponded to field indicators of the degradation classification system. The results showed that clustering analysis divided the degradation classification of alpine grassland into five classes: Non-Degraded (ND), Slightly Degraded (SLD), Moderately Degraded (MD), Severely Degraded (SD), and Extremely Degraded (ED). The most significant factors for alpine grassland degradation included the dominance of Cyperaceae plants, soil total nitrogen content, soil organic carbon content, soil total carbon content, soil bulk density, soil pH, dominance of miscellaneous plants, and elevation among all 17 variables. The assessment and mapping of alpine grassland degradation provide an important basis for alpine grassland protection and management, particularly at a large scale.