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Land use change in urban agglomerations is gradually becoming a major cause and a key factor of global environmental change. As a consequence of the interaction between land use and ecological processes, the transformation in natural ecosystem structure and function with human activity disturbances demands a systematic assessment of ecosystem health. Taking the Central Yunnan urban agglomeration, undergoing transition and development, as an example, the current study reveals the typical land use change processes and then emphasizes the importance of spatial heterogeneity of ecosystem services in health assessment. The InVEST model-based ecosystem service assessment is incorporated into the ecosystem health evaluation, and hotspot analysis is performed to quantitatively measure the ecosystem health response degree to land use according to spatial latitude. The study had three major findings: First, the urban land expansion in the urban agglomeration of central Yunnan between 1990 and 2020 is the most significant. Further, the rate of the dynamic change of urban land is 16.86%, which is the highest among all land types. Second, the ecosystem health of the central Yunnan urban agglomeration is improving but with obvious spatial differences, showing a trend of increasing from urban areas to surrounding areas, with the lowest ecosystem health level and significant clustering in the areas where the towns are located. The ecosystem health level is mainly dominated by the two classes of ordinary and well grades, and the sum of the two accounts for 63.35% of the total area. Third, the process of land transfer, mutual transfer between forest and grassland, and conversion from cropland to forest land contributed the most to the improvement of ecosystem health across the study area. Furthermore, the conversion from cropland and grassland to urban land is an important cause of the sustained exacerbation of ecosystem health. Significantly, the study provides a scientific reference for maintaining ecosystem health and formulating policies for macro-control of land in the urban agglomerations of the mountain plateau.