AbstractTwo hydrological models with different structures and spatial capabilities are selected to simulate the runoff and actual evapotranspiration (AET) in Yingluoxia watershed, the upper reaches of Heihe River basin in northwest of China, to validate their performances in simulating hydrological processes. They are calibrated against the observed runoff at the watershed outlet (Yingluoxia station) for the period from 1990 to 1996 and validated for the period from 1997 to 2000. Results show that in terms of the simulated hydrograph against observations and the two selected objective functions, the conceptual, lumped Water And Snow balance MODeling system (WASMOD) with simple model structure could give the same, even better results than the semi‐distributed Soil and Water Assessment Tool (SWAT) with complex structure. Compared with other model applications to the watershed, simulation for monthly runoff made in this study seems better. With regard to AET, results calculated from both models are comparable as well. Both WASMOD and SWAT are proved to be suitable and satisfactory tools in simulating hydrological processes in the study area, although both of them have strengths and limitations in applications. WASMOD model may be one of the promising alternatives in hydrological modelling. Copyright © 2010 John Wiley & Sons, Ltd.