Widely distributed degradation of alpine meadow in the Qinghai-Tibet Plateau changes water retention capacity, hydraulic conductivity, and thermal conductivity in the shallow soil layer, which could affect surface water and heat fluxes and feedback to regional ecological environment. We compared plant community characteristics, above and underground biomass, and soil physical and chemical properties between typical native and moderately degraded alpine meadow to understand the effect of land degradation on soil thermal and hydraulic properties and environment. The results showed that vegetation coverage reduced significantly (p<0.01) in moderately degraded alpine meadow. Forbs with deep roots replaced the native sedges which have shallow roots to ensure the ecosystem acclimate the drier environment. Under moderate degradation, biodiversity of alpine meadow ecosystem significantly increased (p<0.01). Underground biomass in mattic epipedon (0-10 cm) significantly decreased (p<0.01), however, it significantly increased (p<0.01) in 30-50 cm soil layer. Mattic epipedon thinning decreased vertical heterogeneity in soil bulk density, and bulk density of surface soil significantly increased (p<0.01). The soil tended to coarsen with degradation (p<0.01). Surface soil water retention capacity and saturated hydraulic conductivity decreased, and soil thermal conductivity increased in moderately degraded alpine meadow because surface soil organic matter significantly decreased and soil bulk density increased. The results of this research suggest that the grassland degradation in alpine meadow results in decreases in soil water retention capacity and increases in soil thermal conductivity, which could accelerate land surface water and heat exchange. In addition, the decrease in vegetation coverage and mattic epipedon could lead to a potential positive feedback to permafrost thawing and regional climate warming.