A distributed hydrological model, the Grid-based Integrated Surface-groundwater MODel (GISMOD), was developed to simulate hydrological processes by considering water interaction among different soil layers. The model integrates six modules. Basic information on catchment, such as the flow direction and the drainage network, can be obtained automatically from digital elevation model (DEM) data by using the preprocessing module. In GISMOD, three methods are available to estimate precipitation and eight to estimate evapotranspiration in each grid. Infiltration excess flow, saturation flow, recharge flow from soil and groundwater are all considered by using a simplified method according to the three-layer structure of GISMOD. A case study in the upper-middle reaches of the Heihe River was presented to evaluate the model performance. The results show that the change tendencies of infiltrated water and recharged water are opposite in the study area; the surface water is mainly infiltrated to the soil layer in the upper streams, and then discharged by groundwater in the middle reaches, which is more consistent with the actual situation in the Heihe River basin. In addition, the simulated runoff of a river grid near the Yingluoxia hydrological station is compared with the observed one and the results also demonstrate that GISMOD has a better performance in runoff estimation on both daily and monthly scales.