Ecosystem processes in semiarid landscape mosaics are strongly affected by the interactions among water utilization, plant growth, and vegetation patterns. Management of these semiarid landscapes can be improved with better understanding of the complex interactions between ecology and hydrology that determine the water-use efficiency at landscape and regional scales. However, quantifying the effects of runoff and applying ecohydrological principles toward the improvement of land-use management requires additional research to integrate the ecological and hydrological processes. This study highlights the importance of runoff in the management of vegetation to retard desertification by reducing soil erosion. By coupling a plant growth model with a simple GIS-based model of water redistribution and use, we analyzed the interactions among runoff generation, ‘‘runon’’ reabsorption, and plant growth, in a small watershed in the semiarid sandy grassland area of northern China. Net primary productivity (NPP) and water utilization for the watershed were calculated for different managerial schemes. Annual aboveground NPP (NPPa), maximum leaf biomass (Mleafmax), and water use simulated with runoff effects were 18%, 21%, and 8% greater, respectively, than those simulated without runoff redistribution. Furthermore, simulation with a proposed management strategy for sandy grassland landscapes, which prescribes different plant functional types (grasses, shrubs, and trees) distributed at different slope positions, led to increasing NPPa, Mleafmax, and water use by 34%, 38%, and 28%, respectively, compared to the current land use. The increases in NPP and biomass in turn would reduce wind erosion and associated dust-storm generation and enhance capacity of the system to retard degradation. The coupled model thus can be used as a tool to quantify effects of runoff redistribution for optimal land management and environmental protection, and the study has important managerial implications for semiarid systems, where degradation is of major concern, and runoff redistribution is important.