The Bosten Lake basin is an important arid region of northwest China, and has exhibited a declining trend in both lake area and level of water during recent decades. Reliable information on water yield, an important attribute of available water resources in a region, is vital to assess the potential for socio-economic development. The Integrated Valuation of Ecosystem Services and Tradeoffs (InVEST) model is applied here to simulate water yield in the Bosten Lake basin. The spatial and temporal dynamics of water yield, and the response of water yield to land use and precipitation change, are analysed for the period 1985 to 2015. The results show that, overall, water yield increased during 1985–2015, and that the magnitude of change was greater in the eastern part of the region. The water yield capacity, positively correlated with precipitation, is highest under grassland vegetation and lowest in cultivated and unused land. The paper demonstrates that statistical downscaling and climate reanalysis data can be used in the InVEST model to improve the accuracy of simulated water yield in data scarce regions.