In the mountain area of inland Heihe River Basin at Hexi Corridor of northwest China during the vegetation growing season from May to September, the Simultaneous Heat and Water (SHAW) model of Soil-Vegetation-Atmosphere Transfer (SVAT) system is applied to simulating and studying energy and water balance of the soil-residue-plant canopy layers in the Picea crassifolia forest and the grassland by the forest at the shaded slope and the grassland at the sun-facing slope. The simulation of energy balance indicates that net radiation of the grass- land at the sun-facing slope is more than that of the Picea crassifolia forest and the grassland by the forest at the shaded slope. The energy outgoing components are the first latent heat and next sensible heat from the grassland both at the shaded slope and the sun-facing slope, but those at the former are less. The energy outgoing components are the first sensible heat and next latent heat from the Picea crassifolia forest. The composition and distribution of energy in the soil-residue-plant canopy layers in the Picea crassifolia forest and the grassland by the forest at the shaded slope make the soil layer receive less energy, which therefore, especially the forest possesses the energy conditions for soil water conservation. The simulation of water balance indicates that the water loss of the grassland at the sun-facing slope is mainly caused by soil evaporation, while evapotranspiration of the Picea crassifolia forest and the grassland by the forest at the shaded slope is less than that of the grassland at the sun-facing slope. Half of the evapotranspiration of the Picea crassifolia forest and the grassland by the forest at the shaded slope is consumed by transpiration. After precipitation, the soil water storage is increased much more for the Picea crassifolia forest and also more for the grassland by the forest at the shaded slope. Therefore the shaded slope vegetation, especially the forest is favorable for soil water storage. In the mountain area of ​​inland Heihe River Basin at Hexi Corridor of northwest China during the vegetation growing season from May to September, the Simultaneous Heat and Water (SHAW) model of Soil-Vegetation-Atmosphere Transfer (SVAT) system is applied to simulating and studying energy and water balance of the soil-residue-plant canopy layers in the Picea crassifolia forest and the grassland by the forest at the shaded slope and the grassland at the sun-facing slope. The simulation of energy balance indicates that net radiation of the grass- land at the sun-facing slope is more than that of the Picea crassifolia forest and the grassland by the forest at the shaded slope. The energy outgoing components are the first latent heat and next sensible heat from the grassland both at the shaded slope and the sun-facing slope, but those at the former are less. The energy outgoing components are the first sensible heat and next latent heat from the Picea crassifolia forest. The compos ition and distribution of energy in the soil-residue-plant canopy layers in the Picea crassifolia forest and the grassland by the forest at the shaded slope make the soil layer receive less energy, which therefore, especially the forest possesses the energy conditions for soil water conservation. The simulation of water balance indicates that the water loss of the grassland at the sun-facing slope is mainly caused by soil evaporation, while evapotranspiration of the Picea crassifolia forest and the grassland by the forest at the shaded slope is less than that of the grassland at the sun-facing slope. Half of the evapotranspiration of the Picea crassifolia forest and the grassland by the forest at the shaded slope is consumed by transpiration. After precipitation, the soil water storage is much much more for the Picea crassifolia forest and also the forded grassland by the forest at the shaded slope. especially the forest is the shaded slopeble for soil water storage.