Hetao Oasis is located in a typical piedmont alluvial plain bounded by the Langshan Mountain Range in the north, desert in the west, and the Yellow River in the south. Agricultural activities within the oasis significantly impact the hydrological cycle and water quality in downstream locations. The research uses the Soil and Water Assessment Tool (SWAT) for a piedmont plain by defining the watershed boundary as coinciding with the natural mountain ridge, the border between the oasis and the desert, and the Yellow River. The model simulates water discharge with coefficient of determination and a Nash–Sutcliffe model efficiency of 0.78 and 0.62 during model calibration, and 0.75 and 0.69 during model validation, suggesting that delineation of the watershed as carried out in this research is suitable for piedmont plain topography. From the results, the mountains contribute 28.4% to the water discharge at the outlet of the watershed, and water-use efficiency of irrigated water is about 40%, which is consistent with field-based measurements. Methodologies used in delineating watershed boundaries and parameterizing SWAT provide a solid foundation for water balance studies in other regions of the world with similar topography.