Abstract: The increase of coverage of forest/vegetation is imperative to improve the environment in dry-land areas of China, especially for protecting soil against serious erosion and sandstorms. However, inherent severe water shortages, drought stresses, and increasing water use competition greatly restrict the reforestation. Notably, the water-yield reduction after afforestation generates intense debate about the correct approach to afforestation and forest management in dry-land areas. However, most studies on water-yield reduction of forests have been at catchment scales, and there are few studies of the response of total evapotranspiration (ET) and its partitioning to vegetation structure change. This motivates us to learn the linkage between hydrological processes and vegetation structure in slope ecosystems. Therefore, an ecohydrological study was carried out by measuring the individual items of water balance on sloping plots covered by different vegetation types in the semiarid Liupan Mountains of northwest China. The ratio of precipitation consumed as ET was about 60% for grassland, 93% for shrubs, and >95% for forestland. Thus, the water yield was very low, site-specific, and sensitive to vegetation change. Conversion of grassland to forest decreased the annual water yield from slope by 50-100 mm. In certain periods, the plantations at lower slopes even consumed the runon from upper slopes. Reducing the density of forests and shrubs by thinning was not an efficient approach to minimize water use. Leaf area index was a better indicator than plant density to relate ET to vegetation structure and to evaluate the soil water carrying capacity for vegetation (i.e., the maximum amount of vegetation that can be supported by the available soil water for an extended time). Selecting proper vegetation types and plant species, based on site soil water condition, may be more effective than the forest density regulation to minimize water-yield reduction by vegetation coverage increase and notably by reforestation. Finally, the focuses in future research to improve the forest-water relations in dry-land areas are recommended as follows: vegetation growth dynamics driven by environment especially water conditions, coupling of ecological and hydrological processes, further development of distributed ecohydrological models, quantitative relation of eco-water quota of ecosystems with vegetation structures, multi-scaled evaluation of soil water carrying capacity for vegetation, and the development of widely applicable decision support tools.