The Leaf Area Index (LAI) was derived from the Normalised Difference Vegetation Index (NDVI) obtained from Advanced Very High Resolution Radiometer (AVHRR) data for the years 1982–2004. The NDVI-derived LAI showed a very good agreement (correlation coefficient r up to 0.96) with MODIS LAI. To address the relation between precipitation and LAI, linear correlation analysis between gridded precipitation and the NDVI-derived LAI was conducted for several land uses and each month of the year. Based on the regression coefficients, LAI could be simulated as a function of precipitation. During validation, the simulated LAI showed a very good agreement (r ≥ 0.75) with the NDVI-derived LAI. The simulated dynamic LAI was thereafter implemented in a hydrological model. For comparison, a model run with a static LAI without any inter-annual variations was also conducted. During abnormally dry conditions, the dynamic LAI was lower than the static LAI and less transpiration was therefore simulated. It is shown that a dynamic LAI contributes to a more realistic simulation approach during individual weather events but also that in the long run the simulated transpiration is much more strongly influenced by inter-annual variations in weather than by the additional vegetation dynamics in a semi-arid region.