Environmental indicator systems are a fundamental tool in quantifying the environmental component of sustainable development. They are useful because they quantify the status and trends of key environmental parameters and provide information on the environment that allows authorities and communities to make informed decisions. This article analyzes the basic framework for Chinese environmental indicator systems and presents a "core" set of environmental indicators. In our research, we used a theme approach to develop the environmental indicator systems. We performed two case studies of selected indicators. In the first, we used an urban ambient air pollution composite index and an urban ambient air pollution indicator for three main pollutants to examine trends in urban air pollution in China from 1990 to 2000 at regional and national levels. The results indicate that China has made some progress towards controlling urban air pollution, but must do more in order to reach acceptable pollution levels. We think that an aggregated index and disaggregated indicators have important complementary roles in the policy-making processes. In the second case study, we developed and constructed a grassland degradation index that aggregates information on the extent and severity of grassland degradation. Taking the Xilinhaote region of Inner Mongolia as the study area, we calculated this index by combining remote-sensing data, a geographical information system (GIS), and field investigation. Based on these results, we provide recommendations regarding further development and measurement of environmental indicators in China.