The indicator species approach is an important tool for assessing aquatic ecosystem health. Its effectiveness lies on the selection of species that are both sensitive to environmental changes and representative of the local ecological community. This study aimed to establish a fish-based indicator species framework suited to the upper reaches of the Yellow River. Drawing on field survey data collected from 2022 to 2023, Drawing on field survey data collected from 2022 to 2023, we integrated fish community distribution patterns with species-environment relationships using a multi-faceted analytical approach and validated the results using the Indicator Value (IndVal) method. First, redundancy analysis (RDA) was employed to explore the associations between fish distributions and environmental variables, assessing species-specific responses to individual environmental gradients. Subsequently, RLQ and Fourth-corner analyses were used to quantify the coupling between fish functional traits and environmental gradients. Species that exhibited significant responses in both analyses were selected as candidate indicator species. Six key indicator species were ultimately identified for the upper reaches of the Yellow River: Schizopygopsis pylzovi, Chuanchia labiosa, Gymnocypris eckloni, Platypharodon extremus, Gymnodiptychus pachycheilus, and Triplophysa siluroides. The IndVal method was then used to evaluate the strength of these species as indicators of specific habitats. Among them, five species—S. pylzovi, C. labiosa, P. extremus, G. pachycheilus, and T. siluroides—demonstrated statistically significant indicator values. Furthermore, the Random Forest Model was applied to examine the relationships between indicator species occurrence and environmental factors. Results revealed that the age of reservoir, age of aquaculture, and the cumulative number of dams were the most important predictors of species presence or absence. As these variables increased, the occurrence frequency of indicator species declined significantly. This study provides a methodological reference for the selection of indicator fish species and offers a scientific basis for the ecological protection and management of river basins. These findings offer a methodological basis for the identification of indicator species and provide valuable insights to support ecological monitoring, conservation planning, and watershed management in the Yellow River Basin.