The initial emission rights allocation is the key measure to achieve the goal of total amount control and deepen the emission trading system. Although many studies have focused on the modeling of initial emission rights allocation, such as using game theory and multi-objective optimization methods, few studies have observed the hierarchical relationship of mutual interference and restriction between watershed management agency and local governments in each subarea during allocation. This relationship directly affects the rationality of the results of regional emission rights allocation. In this study, a leader-follower hierarchical decision model (LFHDM) for allocating initial emission rights in a basin is developed. Based on the bilevel programming approach, the model simulates the interactive decision-making process between the watershed management agency of the upper-level model (LFHDM-U) and the local government of the lower-level model (LFHDM-L) in the allocation under total amount control. A case study of China’s Yellow River Basin is conducted to demonstrate the feasibility and practicality of the model. Findings reveal that, compared with the single-level model, the developed LFHDM has higher satisfaction with the allocation scheme. Under different scenarios, the overall satisfaction of the configuration schemes of COD and NH3-N in each province and autonomous region remains above 0.9. In addition, the allocation volumes of COD and NH3-N in each province of the Yellow River Basin in planning year increase with the enhancement of allowable assimilative capacity of water bodies, but the interval gap of satisfaction with allocation schemes gradually narrows. It shows that when the allowable assimilation capacity of a water body is low, the decision-making of the allocation scheme needs to be more cautious. Moreover, for the Yellow River Basin, apart from Qinghai and Sichuan, the task of reducing water pollutants in other provinces in the next few years is very arduous. The average reduction of total COD and NH3-N in the basin is about 48% and 46%, respectively.