Land-use change is a primary driver of ecosystem degradation in terrestrial biodiversity hotspots, undermining global sustainability commitments. However, tracking progress under the Land Degradation Neutrality (LDN) policy, which aims to balance degradation with restoration, requires a systematic assessment of cumulative trends, a critical underexplored gap. Here, we present the first comprehensive annual assessment of land-use changes in these hotspots (1992-2022) guided by the LDN framework. We found that 9.4% of hotspots experienced land-use change, with rates declining by 0.06 Mha/year (1992-2015) before accelerating to 0.4 Mha/year (2016-2022). While human-driven impacts (e.g., deforestation, agriculture shifts) initially dominated, causing net natural ecosystem losses, post-2015 land-use improvement efforts (e.g., revegetation) increased. Yet, net land-use degradation outweighed improvement, resulting in a land-use debt of 29.1 Mha (0.9% of global hotspots). Driven by tropical deforestation, dryland degradation, agricultural shifts and urbanization, this debt correlated with impaired ecosystem structure and function. For instance, agricultural dynamics strongly correlated with reduced greenness in high-debt continents like Asia and the Americas (r = -0.92 and r = -0.80, respectively). Despite continental-scale greenness stabilization post-2015 (stable NDVI > 92%), these regions showed reversed carbon uptake, with net primary productivity declining to -0.0032 and -0.002 Kg C/m(2) yr(-1), respectively. This vegetation greenness paradox, where stable structural greenness masks functional degradation, reveals that current improvements remain insufficient to offset historical degradation, and that structural stabilization may not guarantee functional integrity. Thus, reversing land-use debt necessitates a locally tailored policy framework that prioritizes functional recovery alongside structural greening to ensure LDN restoration practices deliver ecosystem integrity in these hotspots.