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Abstract Land‐cover/climate changes and their impacts on hydrological processes are of widespread concern and a great challenge to researchers and policy makers. Kejie Watershed in the Salween River Basin in Yunnan, south‐west China, has been reforested extensively during the past two decades. In terms of climate change, there has been a marked increase in temperature. The impact of these changes on hydrological processes required investigation: hence, this paper assesses aspects of changes in land cover and climate. The response of hydrological processes to land‐cover/climate changes was examined using the Soil and Water Assessment Tool (SWAT) and impacts of single factor, land‐use/climate change on hydrological processes were differentiated. Land‐cover maps revealed extensive reforestation at the expense of grassland, cropland, and barren land. A significant monotonic trend and noticeable changes had occurred in annual temperature over the long term. Long‐term changes in annual rainfall and streamflow were weak; and changes in monthly rainfall (May, June, July, and September) were apparent. Hydrological simulations showed that the impact of climate change on surface water, baseflow, and streamflow was offset by the impact of land‐cover change. Seasonal variation in streamflow was influenced by seasonal variation in rainfall. The earlier onset of monsoon and the variability of rainfall resulted in extreme monthly streamflow. Land‐cover change played a dominant role in mean annual values; seasonal variation in surface water and streamflow was influenced mainly by seasonal variation in rainfall; and land‐cover change played a regulating role in this. Surface water is more sensitive to land‐cover change and climate change: an increase in surface water in September and May due to increased rainfall was offset by a decrease in surface water due to land‐cover change. A decrease in baseflow caused by changes in rainfall and temperature was offset by an increase in baseflow due to land‐cover change. Copyright © 2009 John Wiley & Sons, Ltd.