Abstract: In recent decades, the hydrological cycle, ecology and environment of the inland river basins in northwest China have been significantly changed due to climate change and implementations of the ecological protection and water division projects. It is necessary to investigate how climate change affects vegetation restoration and runoff generation, and how groundwater table variation and its controlling index maintain ecology and environment under the inter-basin water diversion and reduction of groundwater withdrawal. In this study, we illustrate the mechanism of climate-vegetation-soil-hydrology interactions and their evolutions in the upper, middle and lower reaches of the catchments. For the upper reaches, we propose a method of simulation and prediction of mountain vegetation and hydrological changes under climate warming and wetting. When the method is applied in the Shiyang River basin, the results demonstrate that increase of efficient water use can reduce vegetation recover induced evaporation (thus runoff reduction). In the oasis-desert transition areas of the middle and lower reaches, we analyze desert vegetation-soil (moisture and salt)-groundwater interactions, and propose methods to determine critical values of the ecological groundwater depth and water requirement. For the terminal lake, we establish the relationships among ecological water division, groundwater table and ecological index. These relationships are used to optimize the schemes of ecological water division. In the whole inter-basin, we apply a system analysis approach of water resources-economic and social development-ecological and environment processes to obtain the schemes of the multi-water source allocations in the Shiyang River basin. These schemes can maintain groundwater withdrawal and recharge balance, water requirement and supply balance and ecological functions.