There is 78 % permafrost and seasonal frozen soil in the Yangtze River’s Source Region (SRYR), which is situated in the middle of the Qinghai-Xizang Plateau. Three distinct scenarios were developed in the Soil and Water Assessment Tool (SWAT) to model the effects of land cover change (LCC) on various water balance components. Discharge and percolation of groundwater have decreased by mid-December. This demonstrates the seasonal contributions of subsurface water, which diminish when soil freezes. During winter, when surface water inputs are low, groundwater storage becomes even more critical to ensure water supply due to this periodic trend. An impermeable layer underneath the active layer thickness decreases GWQ and PERC in LCC + permafrost scenario. The water transport and storage phase reached a critical point in August when precipitation, permafrost thawing, and snowmelt caused LATQ to surge. To prevent waterlogging and save water for dry periods, it is necessary to control this peak flow phase. Hydrological processes, permafrost dynamics, and land cover changes in the SRYR are difficult, according to the data. These interactions enhance water circulation throughout the year, recharge of groundwater supplies, surface runoff, and lateral flow. For the region’s water resource management to be effective in sustaining ecohydrology, ensuring appropriate water storage, and alleviating freshwater scarcity, these dynamics must be considered.