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• This paper analyzes whether the financial support for grassland ecological protection and restoration has improved the vegetation coverage of grassland. • There is a nonlinear relationship between financial support for ecological restoration and grassland vegetation coverage. • Different fiscal expenditure structure has a heterogeneous response. • The degree of fiscal decentralization has a significant positive regulatory effect on the ecological benefits. Grassland ecological restoration is an important cornerstone to maintain the sustainable development of grassland ecosystem. One of the goals of financial support for grassland ecological protection and restoration is whether the ecological benefits of grassland are fully realized, and grassland vegetation coverage is the main index to measure the ecological benefits. This paper aims to analyze whether the financial support for grassland ecological protection and restoration has improved the vegetation coverage of grassland. and then verify whether there is room for improvement in the fiscal effect of grassland ecological protection and restoration? Based on the panel data of 54 animal husbandry and semi-agricultural and semi-animal husbandry counties in Inner Mongolia Autonomous Region of China, this paper adopts a bidirectional fixed effect model and cross-fixed effect model to introduce natural factors affecting grassland vegetation coverage into the model and systematically examines the financial effects of ecological benefits of financial support for grassland ecological protection and restoration. The main findings are as follows: (1) there is a nonlinear relationship between financial support for grassland ecological protection and restoration and grassland vegetation coverage when natural factors are taken into account in the model. (2) different fiscal expenditure structure has a heterogeneous response to the impact of grassland ecological protection and restoration on ecological benefits. (3) the degree of fiscal decentralization and the relative performance of the government have a significant positive moderating effect on the ecological benefits of fiscal support for grassland ecological protection and restoration. [ABSTRACT FROM AUTHOR]