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The ecological protection project of substituting small hydropower for fuel (SSHF) in China is to consolidate the achievements of conceding the land to forestry and natural forest protection, solve the problems of the peasants' fuel and rural energy, protect the ecological environment, and promote the comprehensive development of rural economy and society. It is of great importance to the sustainable development of China in the 21st century. This paper provides a survey of substituting small hydropower for fuel in China. Over the last ten years, using small hydropower to replace the rural living fuel in China has resulted in great fruits. By the end of 2013, 252 SSHF projects had been completed in China, and the newly installed capacity of the SSHF power plants had reached 564 MW (MW). The demand of 1.593 million rural residents for living fuel and energy had been met in a long term, 6.29 million ac-res of the forest area had been protected, and the emission of a large amount of pollutants had been decreased. Moreover, many SSHF projects all over the country are still under construction. With regard to the challenges existing in the development course, some suggestions have been proposed. Implementation of the SSHF project will help realize the harmonious coexistence between human beings and the nature in China. [ABSTRACT FROM AUTHOR]