The influence of vegetation change on the water balance in a drainage area is one of the pivotal problems in the study of hydrology and eco-hydrology. In this paper, two typical small drainage areas in the source regions of the Yellow River were taken as examples. For the alpine meadow widely distributed in the river source regions in the Tibetan Plateau, measuring the soil moisture content, infiltration process and evapotranspiration characteristics under different vegetation types and coverage conditions in the drainage areas shows that there was a significant correlation between the vegetation coverage and the soil moisture. Especially, the increasing of soil moisture with vegetation coverage could be described as a quadratic parabolic equation within the depth of 20 cm. When the original plant community is kept and coverage is higher, the water retention ability would be higher in the upper layers of soil. Meanwhile, the rate of water infiltrating from the surface to deeper and surface evapotranspiration would be lower, so the function of water conservation would be obvious. After the alpine meadow degrading, the meadow is getting dry, water retention ability reduces and surface evaporation becomes higher. Even if the meadow is amended artificially, soil moisture content and water retention ability cannot be improved obviously, and surface evapotranspiration would increase. It is very important to protect the original alpine meadow for the hydrological process in the river source regions.