The Three-Rivers Headwater Region (TRHR), located in the hinterland of the Tibetan Plateau, serves as the “Water Tower of China”, providing vital water conservation (WC) services. Understanding the variations in WC is crucial for locally tailored efforts to adapt to climate change. This study improves the Integrated Valuation of Ecosystem Services and Trade-offs (InVEST) water yield model by integrating long-term time series of vegetation data, emphasizing the role of interannual vegetation variation. This study also analyzes the influences of various factors on WC variations. The results show a significant increase in WC from 1991 to 2020 (1.4 mm/yr, p < 0.05), with 78.17% of the TRHR showing improvement. Precipitation is the primary factor driving the interannual variations in WC. Moreover, distinct interactions play dominant roles in WC across different eco-geographical regions. In the north-central and western areas, the interaction between annual precipitation and potential evapotranspiration has the highest influence. Conversely, the interaction between annual precipitation and vegetation has the greatest impact in the eastern and central-southern areas. This study provides valuable insights into the complex interactions between the land and atmosphere of the TRHR, which are crucial for enhancing the stability of the ecosystem.