Abstract: Under the background of Rural Revitalization, a new policy of returning farmland to forests in Dali Yunnan province has been issued and implemented.On the basis of the realization of "Ecological habitability" in Rural areas,we should also pay more attention to the development of the sustainable livelihood ability of the returning farmers.The framework of sustainable livelihood analysis has been generally recognized by scholars at home and abroad in the study of farmers' livelihood.Based on the framework, this paper takes the farmers returning farmland to forest in Dali as the research object, compares and measures the changes of farmers' livelihood capital before and after returning farmland by using AHP, and evaluates the sustainable livelihood ability of farmers from three aspects:capital accumulation ability, employment ability and social risk coping ability.The study found that the physical capital, human capital, financial capital and social capital all increased in addition to the decline of natural capital.However, human capital has not changed much before and after the return of farmland, so it has inhibited the further development of farmers' livelihood ability.Therefore, we should focus on the human capital as the main line to improve the sustainable livelihood development of farmers.