A scheme describing the process of stream–aquifer interaction was combined with the land model CLM4.5 to investigate the effects of stream water conveyance over riparian banks on ecological and hydrological processes. Two groups of simulations for five typical river cross sections in the middle reaches of the arid-zone Heihe River basin were conducted. The comparisons between the simulated results and the measurements from water wells, the FLUXNET station, and remote sensing data showed good performance of the coupled model. The simulated riparian groundwater table at a propagation distance of less than 1 km followed the intra-annual fluctuation of the river water level, and the correlation was excellent (<i>R</i><sup>2</sup> = 0.9) between the river water level and the groundwater table at the distance 60 m from the river. The correlation rapidly decreased as distance increased. In response to the variability of the water table, soil moisture at deep layers also followed the variation of river water level all year, while soil moisture at the surface layer was more sensitive to the river water level in the drought season than in the wet season. With increased soil moisture, the average gross primary productivity and respiration of riparian vegetation within 300 m from the river in a typical section of the river increased by approximately 0.03 and 0.02 mg C m<sup>−2</sup> s<sup>−1</sup>, respectively, in the growing season. Consequently, the net ecosystem exchange increased by approximately 0.01 mg C m<sup>−2</sup> s<sup>−1</sup>, and the evapotranspiration increased by approximately 3 mm day<sup>−1</sup>. Furthermore, the length of the growing season of riparian vegetation also increased by 2–3 months due to the sustaining water recharge from the river. Overall, the stream–aquifer water interaction plays an essential role in the controlling of riparian hydrological and ecological processes.