Under the combined effects of climate change, overexploitation, and intense grazing, temperate steppe in northern China is experiencing increasing deterioration, which is typified by a shift from structural degradation to functional disruption. Accurately tracking steppe degradation using remote sensing technology has emerged as a crucial scientific concern. Prior research failed to integrate ecosystem structure and function and lacked reference baselines, relying only on individual indicators to quantify degradation. To resolve these gaps, this study established a novel degradation evaluation index system integrating ecosystem structure and function, incorporating vegetation community distribution and proportions of degradation-indicator species to define reference states and quantify degradation severity. Analyzed spatiotemporal evolution and drivers across the temperate typical steppe (2013–2022). Key findings reveal (1) non-degraded and slightly degraded areas dominated (75.57% mean coverage), showing an overall fluctuating improvement trend; (2) minimal transitions between degradation levels, with stable conditions prevailing (59.52% unchanged area), indicating progressive degradation reversal; and (3) natural factors predominated as degradation drivers. The integrated structural–functional framework enables more sensitive detection of early degradation signals, thereby informing more effective steppe restoration management.