Globally, vegetation has been changing dramatically. The vegetation–water dynamic is key to understanding ecosystem structure and functioning in water-limited ecosystems. Continual satellite monitoring has detected global vegetation greening. However, a greenness increase does not mean that ecosystem functions increase. The intricate interplays resulting from the relationships between vegetation and precipitation must be more adequately comprehended. In this study, satellite data, for example, leaf area index (LAI), net primary production (NPP) and rainfall use efficiency (RUE), were used to quantify vegetation dynamics and their relationship with rainfall in different reaches of the Yellow River Basin (YRB). A sequential regression method was used to detect trends of NPP sensitivity to rainfall. The results showed that 34.53% of the YRB exhibited a significant greening trend since 2000. Among them, 20.54%, 53.37%, and 16.73% of upper, middle, and lower reach areas showed a significant positive trend, respectively. NPP showed a similar trend to LAI in the YRB upper, middle, and lower reaches. A notable difference was noted in the distributions and trends of RUE across the upper, middle, and lower reaches. Moreover, there were significant trends in vegetation–rainfall sensitivity in 16.86% of the YRB’s middle reaches—14.08% showed negative trends and 2.78% positive trends. A total of 8.41% of the YRB exhibited a marked increase in LAI, NPP, and RUE. Subsequently, strategic locations reliant on the correlation between vegetation and rainfall were identified and designated for restoration planning purposes to propose future ecological restoration efforts. Our analysis indicates that the middle reach of the YRB exhibited the most significant variation in vegetation greenness and productivity. The present study underscores the significance of examining the correlation between vegetation and rainfall within the context of the high-quality development strategy of the YRB. The outcomes of our analysis and the proposed ecological restoration framework can provide decision-makers with valuable insights for executing rational basin pattern optimization and sustainable management.