The world's largest afforestation programs implemented by China made a great contribution to the global “greening up.” These programs have received worldwide attention due to its contribution toward achieving the United Nations Sustainable Development Goals. However, emerging studies have suggested that these campaigns, when not properly implemented, resulted in unintended ecological and water security concerns at the regional scale. While mounting evidence shows that afforestation causes substantial reduction in water yield at the watershed scale, process‐based studies on how forest plantations alter the partitioning of rainwater and affect water balance components in natural vegetation are still lacking at the plot scale. This lack of science‐based data prevents a comprehensive understanding of forest‐related ecosystem services such as soil conservation and water supply under climate change. The present study represents the first “Paired Plot” study of the water balance of afforestation on the Loess Plateau. We investigate the effects of forest structure and environmental factors on the full water cycle in a typical multilayer plantation forest composed of black locust, one of the most popular tree species for plantations worldwide. We measure the ecohydrological components of a black locust versus natural grassland on adjacent sites. The startling finding of this study is that, contrary to the general belief, the understory—instead of the overstory—was the main water consumer in this plantation. Moreover, there is a strict physiological regulation of forest transpiration. In contrast to grassland, annual seepage under the forest was minor in years with an average rainfall. We conclude that global long‐term greening efforts in drylands require careful ecohydrologic evaluation so that green and blue water trade‐offs are properly addressed. This is especially important for reforestation‐based watershed land management, that aims at carbon sequestration in mitigating climate change while maintaining regional water security, to be effective on a large scale.