The Three-North Shelterbelt Project (TNSP) is one of the largest ecological restoration projects of the world. Although its important role in regulating the ecosystem of northern China has been acknowledged, how this project affects the surface water-energy balance deserves further evaluation. This study characterizes spatiotemporal variation of climate variables and vegetation coverage/density over the Three-North Region (TNR) of China using multiple datasets since the implementation of the TNSP. Of particular importance is that effects of vegetation restored during the TNSP on surface water-energy budget are examined for the study domain. Our results show that accompanied by a significant enhancement of vegetation coverage and density in the TNR, its annual air temperature and precipitation have increased 1.46 °C and 89.1 mm, respectively from 1982 to 2015. We find such rise in the air temperature and precipitation plays a positive role in the TNR’s vegetation restoration in a sense that the vegetation dynamics show positive correlation with its regional air temperature and precipitation, while more sensitive to precipitation. We also find carbon sequestration of the TNR increases at the cost of greater water consumption through evapotranspiration since the TNSP commences. In some arid regions, revegetation accelerates the water deficit due to an excessive rate of restoring vegetation; yet, no substantial water imbalance occurs as a result of enhanced precipitation and water use efficiency during this period. Although the solar radiation increases with decreases in surface albedo over the last few decades, our results do not reveal an appreciably increasing trend in the land surface temperature of the TNR. This is because the improved vegetation can assimilate CO2 (mitigating greenhouse gas emissions) and transpire water by photosynthesis, thereby increasing latent heat flux and reducing the warming effect. This study highlights a mixed consequence of the TNSP by inducing both positive and negative effects on the surface water-energy balance over the TNR.