To draw water from Datong river into Huangshui river is a large-scale project to transfer water cross several basins, which is mainly used to solve water shortage of Huangshui watershed and has remarkable significance for sustainable economic development of Qinghai province, eco-environmental improvement of Huangshui watershed and eco-environmental protection of the Yellow river headstream region. Situation of Huangshui watershed eco-environment and favorable effect of drawing water project on eco-environment of Huangshui watershed are analyzed. The water transference project will increase runoff of Huangshui river, increase saftey coefficient of industry and agriculture using water, water environment, coverage rate of vegetaion, agricultural environment and the local people’s living environment, control soil and water loss and decrease natural disasters.