A novel partitioned function decomposition method is proposed and validated for accurately and effectively solving the interaction between waves and ships with sloshing effect. This scheme employs a hybrid functional-decomposition method that utilizes both potential and viscous flows to accurately and efficiently solve the wave-ship interaction in the external domain, while employing the original viscous method for simulating sloshing in the internal domain. To further enhance computational efficiency, a single-phase Level-set method is employed. Firstly, the issue of non-conservation in the level-set model is addressed through the application of a mass correction method. Additionally, based on the principle of mass conservation, modifications are made to the boundary conditions for free surface motion. As a result, an improved single-phase Level-set method is developed, which combines jump condition correction and mass correction. Through simulations involving linear and nonlinear free surfaces, impulsive pressures, overall forces on the tank, as well as comparisons with experimental data, it is observed that the proposed Level-set method effectively solves the sloshing in the internal domain, a problem for which the traditional single-phase Level-set method often fails to tackle with. Subsequently, by adopting a multi-block grid technique to mark tank and non-tank grid blocks and integrating the improved single-phase Level-set method with the SWENSE model, a partitioned function decomposition method is established to handle ship motions with sloshing effect in waves. It is found that simultaneously solving the internal and external flow problems using traditional implicit and explicit motion-solving methods poses certain challenges. Therefore, an implicit-inner-iteration solution method is proposed. By combining the proposed motion-solving method with the partitioned function decomposition model, satisfactory results are achieved for the wave-ship-sloshing interaction.