AbstractA field experiment was conducted in the Zhangjiachong watershed to analyze the characteristics of rainfall–runoff process and sediment yield under different types of terraces. Various runoff plots were utilized, and a two serial tank model was employed to simulate runoff generation and concentration processes, taking into account vegetation interception. A soil erosion model incorporating raindrop erosion and sheet erosion was established to replicate sediment yield and concentration process. The parameters of the rainfall–runoff model and soil erosion model were calibrated and validated using observed runoff and sediment yield data. The controlling factors on runoff and sediment yield were explored and compared. The results indicate that both calibration and validation outcomes were acceptable. The earth‐banked terraces–citrus demonstrated the largest coefficients of upper and lower surface runoff, while its upper runoff threshold of the upper tank and the runoff threshold of the lower tank were the lowest, suggesting that it was more likely to produce surface and subsurface runoff. On the other hand, the stone dike terraces–crops exhibited the smallest coefficients of upper and lower surface runoff, while its upper runoff threshold of the upper tank was the highest. The lower runoff threshold of the upper tank was the same across different types of terraces. Compared to the earth‐banked terraces, the stone dike terraces have a larger infiltration coefficient in the upper tank and a smaller infiltration coefficient in the lower tank. Sensitivity analysis indicates that the most sensitive factors affecting runoff simulation results are the runoff threshold and the infiltration coefficient of the lower tank. Terraces, whether constructed with earth banks or stone dikes, are effective in reducing soil erosion. However, during storm rainfall events, these terraces may be partially destroyed, resulting in a higher sediment yield than that of the same vegetation cover on slope land. Terraces with hedgerows have a more significant effect on reducing runoff and sediment than those without hedgerows.