This study developed a distributed hydrological model coupled with cryospherical processes and applied it in order to simulate the long-term change of frozen ground and its effect on hydrology in the upper Heihe basin. Results showed that the permafrost area shrank by 8.8%, and the frozen depth of seasonally frozen ground decreased. Runoff in cold seasons and annual liquid soil moisture increased due to frozen soils change. Groundwater recharge was enhanced due to the degradation of permafrost.