In the loess hilly and gully region of northern Shaanxi Province, the CoupModel was used to simulate the water balance of the soil-vegetation-atmosphere in the south- and north-facing slopes of grasslands. The simulation results showed that simulated values of soil water content and soil temperature was generally in good agreement with measured values in the investigated stands, implying that the CoupModel could be successfully applied to demonstrate the complex interactions between hydrological processes in the soil-vegetation-atmosphere system. Soil evaporation in the south-facing slope of grassland was higher than that in the north-facing slope, while vegetation transpiration in the south-facing slope was lower than that in the north-facing slope, indicating that there was a significant difference of water exchanges between the interfaces of atmosphere and soil, and soil and vegetation. In the dry year, vegetation transpiration and soil evaporation were the main components of water consumption in the investigated stands, which was more than the precipitation and water input was lower than water output in the soil reservoir. While in the wet year, 20% of precipitation was recharged and stored in the soil reservoir. This study indicated that water transfer and balance in the south-facing and north-facing slopes was quite different. Since there was high soil evaporation and low water storage in the south-facing slope, it is important to carefully choose planting species during the processes of the sloping land conversion program.