Hydrological cycles of inland rivers are highlighted in paleoclimate studies of arid regions. A great number of studies have been published in this regard, but most of the studies have mainly used climate proxies to reconstruct the evolution of paleoclimate and paleoenvironment, and there have been little long-term simulation and reconstruction experiments. Concerning this issue, we systematically carried out the long-term reconstruction and simulation experiments of hydrological cycle based on paleoenvironment records of the Shiyang River drainage basin with a lot of methods such as paleoclimate simulations, the Holocene monsoon simulations, lake water and energy balance model and quantitative reconstruction of paleo-precipitation and paleo-runoff. The results showed that the simulation results had a good consistency with the reconstruction results, indicating that mid-Holocene was “climatic optimum” in the Holocene. This research provided a new perspective for reconstruction and simulation studies of climate change in arid areas.