Coastal bays, situated within Earth’s critical zone, play important ecological and socioeconomic roles. This study developed an integrated ecosystem health assessment framework based on ecosystem services specific to coastal bays, particularly exploring approaches to determine critical indicators and establish a reference benchmark. The framework was applied to two typical coastal bays (Jiaozhou Bay and Daya Bay) to ascertain significant health differences, subsequent challenges and prospective management. Comparatively, Daya Bay was healthier. Daya Bay received an overall comprehensive index ecosystem health score of 69.42 (good); however, its ecosystem services scores differed significantly (supporting services = 71.34, regulating services = 87.29, provisioning services = 3.59, cultural services = 74.30), indicating severe degradation in its ecosystem food provisioning function. Jiaozhou Bay received corresponding score of 55.79 (moderate), and its ecosystem services scores were relatively lower (supporting services = 63.31, regulating service = 54.30, provisioning services = 6.18, and cultural services = 54.74), indicating widespread ecosystem degradation. The health status of coastal bays is closely associated with both natural characteristics and human interventions. The narrow bay mouth of Jiaozhou Bay, its limited enclosed seawater area, and the intensive land reclamation that has taken place since the 1950s have directly or indirectly led to the low score of most of its indicators, particularly regarding the significant reductions in its water area and shoreline. The geological advantages of Daya Bay is its large area of water and that it is open to the outer sea, which have contributed to its comparatively healthier status, wherein scores of only a few indicators were bad (i.e., biological indicators of sensitive organisms in the upper food chain). Results from this study provide important information for prospective bay management. For Jiaozhou Bay, more effort should be paid to improving ecosystem health in a comprehensive way, particularly fishing control, land reclamation control and habitat restoration. For Daya Bay, overfishing should be better controlled, while more emphasis should be paid to protecting and restoring certain moderately specific habitats and species. For effective management, we highlight that ecosystem management strategies needs to be differentiated among different bays based on their significant natural and social features. Our approach provides a practical ecosystem health assessment tool that can be applied to other coastal bays to better inform sustainable management and conservation initiatives.