In this study, a water-air two-phase flow model was employed to investigate the formation, extension, and dissipation of groundwater ridging induced by recharge events in a hypothetical hillslope-riparian zone, considering interactions between the liquid and gas phases in soil voids. The simulation results show that, after a rain begins, the groundwater table near the stream is elevated instantaneously and significantly, thereby generating a pressure gradient driving water toward both the stream (the discharge of groundwater to the stream) and upslope (the extension of groundwater ridging into upslope). Meanwhile, the airflow upslope triggered by the advancing wetting front moves downward gradually. Therefore, the extension of groundwater ridging into upslope and the downward airflow interact within a certain region. After the rain stops, groundwater ridging near the stream declines quickly while the airflow in the lower part of upslope is still moving into the hillslope. Thus, the airflow upslope mitigates the dissipation of groundwater ridging. Additionally, the development of groundwater ridging under different conditions, including rain intensity, intrinsic permeability, capillary fringe height, and initial groundwater table, was analyzed. Changes in intrinsic permeability affect the magnitude of groundwater ridging near the stream, as well as the downward speed of airflow, thereby generating highly complex responses. The capillary fringe is not a controlling factor but an influence factor on the formation of groundwater ridging, which is mainly related to the antecedent moisture. It was demonstrated that groundwater ridging also occurs where an unsaturated zone occurs above the capillary fringe with a subsurface lateral flow.