Significant vegetation increase in the Loess Plateau (LP) of China could strongly affect the surface water budget. Through the WRF model with the Water Vapor Tracer (WVT) method tracking moisture within the LP, this study conducted three sets of experiments from 1999 to 2018 with GLASS Fractional Vegetation Cover (FVC) data. The results indicate that vegetation has a critical role in partitioning evapotranspiration (ET) into transpiration (Et), canopy evaporation (Ecan), and soil evaporation (Edir), thus regulating terrestrial internal convective precipitation (P). The local P response largely depends on external P (E_P), while the internal P (I_P) contribution remains minor. In summer, the total wet difference of I_P in the LP is about 0.03 mm/day, almost 5 times that of E_P. Greening also causes surface runoff reduction. Thus, in spring and summer, surface water storage (W) decreases due to the greater increase in ET than in P. In autumn, W increases by about 0.06 mm/day due to a large decrease in Ecan, implying confining the increased W to shallower soils, resulting in accelerated loss of deep soil moisture. The greening trend of 2000–2018 contributed to an increase in I_P, which could not offset increased ET and reduced E_P, leading to terrestrial water storage reduction.