Objective To explore the construction of an integrated system for vertical nursing performance management and stratified nurse performance appraisal and analyze its application effects. Methods Based on frameworks from multiple Grade A tertiary hospitals in China and tailored to the operational context of our hospital, an integrated system for vertical nursing performance management and stratified nurse performance appraisal was developed and officially implemented in January 2020. A total of 251 and 291 nurses were selected before (January to December 2019) and after (January to December 2022) implementation, respectively, nurses' satisfaction with performance, patients' satisfaction with nursing care, nursing quality scores, levels of nursing professionalism, and intrinsic motivation of nurses were compared before and after implementation. Results After the implementation of the system, nurses' satisfaction with performance increased, patients' satisfaction with nursing care improved, and nursing quality scores, as well as scores on theoretical knowledge exams and technical operation assessments ("three basics") for nurses, were higher than those before implementation (all P<0.05); the nurses' turnover rate decreased from 3.8% before implementation to 1.1% after implementation(P<0.05). Conclusions The development of an integrated system for vertical nursing performance management and stratified nurse performance appraisal is scientifically sound and feasible. Its implementation standardizes performance management, enhances the stability of the nursing workforce, fosters disciplinary development, and ultimately improves nursing quality and satisfaction among both nurses and patients.