In hydrological modeling, the accuracy of precipitation data and the reflection of the model’s physical mechanisms are crucial for accurately describing hydrological processes. Identifying reliable data sources and exploring reasonable hydrological evolution mechanisms for hydrology and water resources research in high-altitude mountainous regions with sparse stations and limited data constitute a significant challenge and focus in the field of hydrology. This study focuses on the Yarkant River Basin in Xinjiang, which originates from glaciers and contains a substantial amount of meltwater runoff. A dynamic glacier melt module considering the synergistic effects of multiple meteorological factors was developed and integrated into the original Soil and Water Assessment Tool (SWAT) model. Four precipitation datasets (ERA5-land, MSWEP, CMA V2.0, and CHM-PRE) were selected to train the model, including remote sensing precipitation products and station-interpolated precipitation data. The applicability of the improved SWAT model and precipitation datasets in the source region of the Yarkant River was evaluated and analyzed using statistical indicators, hydrological characteristic values, and watershed runoff simulation effectiveness. The optimal dataset was further used to analyze glacier evolution characteristics in the basin. The results revealed the following: (1) The improved model fills the gap in glacier runoff simulation with respect to the original SWAT model, with the simulation results more closely aligning with the actual runoff variation patterns in the study area, better describing the meltwater runoff process. (2) CMA V2.0 precipitation data has the best applicability in the study area. This is specifically reflected in the rationality of the spatial and temporal distribution patterns of the inverted precipitation, the accuracy observed in capturing precipitation events and actual precipitation characteristics, the goodness of fit in driving hydrological models, and the observed precision in reflecting the composition of watershed runoff, all of which are superior to those pertaining to other precipitation products. (3) The glacier melt calculated using the improved SWAT model informed by CMA V2.0 shows that during the study period, the basin formed a pattern with a positive–negative glacier balance demarcation at 36.5° N, featuring melting at higher latitudes and accumulation at lower latitudes. The results of this study are of significant importance for hydrometeorological applications and hydrological and water resources research in this region.