Soil erosion and restoration affect the structure and function of ecosystems and society, and have attracted worldwide attention. Changes in runoff and sediment transport after restoration practices in China’s Loess Plateau have been widely studied and many valuable results have been reported. However, this research was mainly conducted in large watersheds, and quantified the effects of restoration practices through the restoration period. In this study, we compared two adjacent watersheds (one restored and the other natural) in a hill and gully region of China’s Loess Plateau to reveal the impacts of restoration practices. We collected annual rainfall, runoff, and sediment transport data from 1988 to 2018, then investigated temporal variation of runoff and sediment transport to examine their relationships with rainfall. We also calculated the retention rate of soil and water under the restoration practices. The restored watershed showed a significantly decreased sediment modulus (the amount per unit area); the natural watershed showed no significant change. In addition, the restored watershed had lower runoff and sediment modulus values than the natural watershed, with greater effectiveness as rainfall increased. Revegetation and terrace construction contributed more to the retention of soil and water (65.6 and 69.7%, respectively) than check dams (<10%). These results improve our understanding of the effects of restoration practices, and provide guidance on ways to preserve soil and water through restoration in a small watershed in the Loess Plateau.