China’s grassland policy has changed substantially since the country’s “reform and opening up” about four decades ago, with profound impacts on both herder’s wellbeing and grassland conservation in Inner Mongolia. However, whether the herder-grassland system of Inner Mongolia has become more sustainable has not been quantitatively assessed against established sustainability standards. Thus, this study aimed to quantify the sustainability gaps of the herder-grassland system of Inner Mongolia from 1982 to 2015, based on the Regional Safe and Just Operating Space (RSJOS) framework and landscape sustainability science. Specifically, we evaluated grassland productivity by combining the envelope of variability and spatial explicit landscape analysis methods, and assessed herder’s wellbeing using the minimum standards of the United Nations’ Sustainable Development Goals (SDGs). Our main findings are: (1) the grassland productivity of Inner Mongolia returned to a safe operating state after experiencing unsafe changes between 2000 and 2009; (2) the hotspots of grassland degradation during 1980s-2015 were mainly located in desert steppes and the agro-pastoral transitional zone; (3) herder’s income, education, safe drinking water, and social equality did not reach the internationally agreed minimum standards of SDGs, although the overall wellbeing improved during recent decades; and (4) herder’s livelihood became less reliant on grasslands as their economic gains from raising livestock declined rapidly. We conclude that, while Inner Mongolia has made substantial progress in economic development during recent decades, improving the basic needs of herders (especially socioeconomic equity and high-quality education) and restoring severely degraded grasslands remain the most urgent and challenging issues that hinder a sustainability transition in the region.