Ecological civilization construction (ECC) is an essential strategy for promoting the comprehensive green transformation of the economic and social development, and also the essential requirement of Chinese-style modernization. As an important institutional arrangement for restoring and improving the eco-environment, the key subsidy for transfer payment in national key ecological functional areas (KSTPNKEFA) is a top priority to push the ECC to a new level during the 14th Five-Year Plan period. The evaluation of its effects and the analysis of its functional mechanism have become a research highlight. Based on the county-level data of the Beijing-Tianjin-Hebei (BTH) region from 2002 to 2021, this paper constructs a staggered difference-in-difference (DiD) model to analyze the effect on eco-environment improvement of the KSTPNKEFA. The study finds that the KSTPNKEFA improves the eco-environment quality in the BTH region, and the effects are more significant in the counties which set up national key ecological functional areas. In addition, due to long-term implementation and large capital expenditures of the relevant system, the effect on eco-environment improvement is more obvious in Hebei Province. Furthermore, this paper finds that the transfer payment system improves the income level of rural residents, thus enhancing their incentives for environmental protection, and optimizing their production behavior. Accordingly, this paper puts forward the policy suggestions of strengthening the implementation of incentive and constraint measures, accelerating the cultivation of ecological industry, and exploring horizontal transfer payment on the basis of the existing system, so as to make full use of the KSTPNKEFA and to help realize the Beautiful China Initiative as soon as possible.