The Budyko hypothesis, less parameters and definite physical significance, was used to quantitatively analyze the effects of climate changes and vegetation dynamics on actual evapotranspiration. It is of great significance to study the water balance and energy distribution in Chaohe watershed. We used the Budyko empirical model to verify the water-energy balance theory based on the hydrological and meteorological data from 1961 to 2015 in Chaohe watershed. The most suitable model of the basin and the optimal values for the model parameters were determined. Furthermore, we quantitatively analyzed the impacts of vegetation dynamics and climate changes on the actual evapotranspiration. Results showed that the Budyko model modified by underlying surface parameters improved the accuracy of predicting actual evapotranspiration compared to the classical Budyko models. The Fu Baopu model had the highest precision in the Chaohe watershed; the mean relative error, the Nash efficiency coefficient, and the coefficient of determination were 27.66 mm, 0.82 and 0.85, respectively. Using the optimizing model parameter (2.54), the Fu Baopu model could better reflect the changed characteristics of the actual evapotranspiration. Finally, the scenario analysis indicated that vegetation dynamics and climate variation in Chaohe watershed played a positive role in actual evapotranspiration; climate changes are a major driver of the increase in actual evapotranspiration.