The non-point source pollution arising from soil erosion is one of the main reasons for the deterioration of the water quality of the Taihu Lake Basin. Forest plays an important role in controlling soil erosion and reducing nutrient loss. Based on the survey data on forest resources in Anji County, we estimate the amount of soil erosion and nutrient loss of nitrogen and phosphorus reduced by forest, using soil erosion modulus method and soil nutrient content. In accordance with the degradation coefficient of pollutant and regional compensation standards of environmental resources, we assess the ecological benefits of forest function in reducing nutrient loss of nitrogen and phosphorus in Anji County. The results show that the forest in Anji County can reduce the soil erosion amount at 1.51 million t annually on the average, so as to control the nutrient loss of 1 409 t of total nitrogen and 577 t of total phosphorus in soil, equivalent to annually avoiding the flow of 824 t of total nitrogen and 410 t of total phosphorus into river water; this ecological service function can make forests in Anji County get 92.55 million yuan of ecological compensation funds (about 688 yuan /hm2•a), equivalent to 15 times of the current ecological compensation standard (47 yuan /hm2). The study reveals the importance of forest function in controlling soil erosion and nutrient loss in the upper reaches of Taihu Lake Basin to water environment protection in the basin, conducive to carrying out pollution control and protection work of the water environment in the basin.