This research aims to identify the key indicators of land-use change that affect ecosystem service in the coastal city of Xiamen. The methods of transfer matrix and land-use dynamic degree are used to analyze land-use change, and the spatial distribution of ecosystem service values (ESV) is mapped from 1989 to 2018 using cluster analysis. During this 30-year period, the built-up land expanded rapidly through occupation of farmland and landfilling of the watershed. The biggest contribution to the reduction of ESV in this stage is the loss of farmland followed by the loss of watershed. By 2018, the spatial distribution of ESV had become very unbalanced and polarized. The high-value areas are mainly distributed in the northern mountainous areas, with the low-value areas concentrated in the flat areas near the coastline, and only a few medium-value areas of ESV remained. Generally, from 1989 to 2018, the ESV in Xiamen decreased by about CNY 200 million in total, with the largest proportion of ESV reduction (CNY 120 million) occurring in the 2000–2010 period. Considering ESV categories, the significant reduction of Regulating Service (53.5–57.8%) was mainly due to the loss of water areas (CNY −70 million) to low ESV areas (built-up land) in urbanization, followed by the loss of farmland (CNY −50 million). This means that Xiamen should strengthen the protection of ecological lands in future urban planning to alleviate and reverse the current ecological imbalance.