Shiyang River basin, located in the inland of northwest China, is an ecologically fragile area with water shortage and prominent environmental problems. Understanding the upstream water production process of Shiyang River can provide scientific reference for regional sustainable development. Based on InVEST model, we evaluated annual water yield in the upstream of Shiyang River in the past 30 years with soil, meteorological and land use data in 1986, 2000, 2010 and 2015 as inputs and applied scenario simulation method to explore its response to climate and land use changes. The results showed that areas with high water yield in the upstream of Shiyang River were concentrated in the west and southwest regions. Among the eight major river systems, Xiying River had the largest water yield depth (220.97 mm) and the highest water yield capacity (46.05%). The unutilized land had the highest water production capacity (55.49%), followed by grassland (34.52%), cultivated land (33.27%), and woodland (31.59%). From 1986 to 2015, water yield in the upstream of Shiyang River showed a change pattern of increase first, then decrease, and then slow increase. The changes of the eight major river systems were significantly different. Climate change, especially precipitation change, is the main factor affecting the changes of water yield. Land use change affected actual evaporation by changing underlying surface condition, with consequence on water yield.