A new codification method (named a modified binary tree codification method) is developed for coding drainage networks. To express the inner topological structure of a drainage basin, it is necessary to delineate and code digital drainage networks from digital elevation model datasets. In this study, the established software TOPAZ is used to delineate river reaches, and the new codification method is applied, which is based on the application of binary-tree structures and hierarchical zones. A coded drainage network can then be stored in a relational database management system to achieve efficient manipulation of data items for topological operations. The utility of the new codification method is demonstrated by an example applied to the Digital Yellow River Model. The drainage network of the Middle Yellow River in northern China has been coded and the hydrological and soil erosion processes of its sub-basin, the Chabagou River basin, are simulated. Because more details of the drainage network can be efficiently and effectively described, the new codification method can support complex hydrological models and extract more information from hydrological simulations than ever before.