Abstract: The Yellow River source region (YRSR) is a crucial water production and conservation region in the Yellow River Basin. Recent climate warming has led to accelerated permafrost degradation in the area, with the active layer of permafrost gradually thickening. These changes complicate the study of water resources and conservation functions in YRSR. It is of great significance to clarify the status of permafrost changes and to quantitatively assess the response of water conservation capacity to permafrost variations for the scientific management of water resources in the Yellow River Basin and the Qinghai-Tibet Plateau. Based on multi-source data including hydrological, meteorological, and permafrost information, this study analyzes the effects of permafrost changes in YRSR on surface runoff and water conservation capacity. The results indicate that: (1) Between 1960 and 2020, permafrost in YRSR showed a degrading trend, with the active layer thickness increasing by 10-25 cm. The area of continuous permafrost gradually shrank, and by 2020, permafrost had completely disappeared in some regions. (2) Water conservation capacity in YRSR exhibited a fluctuating upward trend, with 14 years showing negative values and 26 years positive values between 1979 and 2018. This suggests that, overall, water resource recharge exceeded consumption. Since the implementation of water regulation and the Grain-for-Green policy in 1998, water conservation capacity has gradually improved. (3) As permafrost degrades (i.e., the active layer thickness increases), water conservation capacity has been increasing. The changes in water conservation capacity from the source to the Yellow River's Lian Station and from Jimai Station to Mentang Station showed the most significant responses to permafrost degradation. The findings of this study provide valuable references for the management and sustainable utilization of water resources in the Yellow River Basin.