The current classification of degraded forests mainly relies on the growth status of the tree layer, with insufficient consideration of the ecological functions of the forest stand. To test whether the water source conservation function of forests linearly declines as degradation intensifies under the current degradation classification standards, this study selected four types of P. tabuliformis forests with different degrees of degradation in the western Liaoning region as the research objects. This study systematically quantified the canopy interception, litter water holding capacity, and soil water storage capacity. The entropy weight method was used to comprehensively evaluate the water conservation function, and a random forest model was used to analyze the contributions of each level to the water conservation function. The results show that the comprehensive evaluation results of water source conservation function have a non-linear relationship with the degree of degradation. Specifically, the total canopy interception amount and canopy interception rate of moderately degraded P. tabuliformis forests (MD) are the highest, which is due to the fact that P. tabuliformis and the developed under story shrub and grass layer together form an efficient interception structure; the thickness, accumulation, and water retention capacity of the litter layer in the degraded forest stands are significantly higher than those of the control group (CK,P < 0.05), among which the water retention capacity of the litter layer of severely degraded P. tabuliformis forests (ED) is the strongest, mainly because the window expansion increases the input of shrub and grass litter; the soil water retention performance is the best in the slightly degraded P. tabuliformis forests (SD). The comprehensive evaluation using the entropy-based method indicates that MD achieved the highest score for water-saving functionality, while CK scored the lowest. This is primarily due to the formation of a composite canopy structure comprising P. tabuliformis and shrubs following moderate degradation, thereby achieving multi-layered hydrological regulation. In summary, in the semi-arid area of Liaoning, the degradation of the tree layer of P. tabuliformis forests has not led to a systematic decline in water source conservation function, and even in a certain stage of degradation, this function has increased. Therefore, it is recommended that in the future evaluation and management of degraded forests, key ecological function indicators such as water conservation should be included to establish a more comprehensive and objective classification and restoration system for degraded forests. [GRAPHICS] .