Global warming profoundly affects hydrological processes and regional aridity. However, the shifts in the arid–humid transition zone and its relationship to divergent surface and subsurface hydrological responses remain not fully understood. This study investigates the spatiotemporal aridity changes in China using hydroclimate datasets (1950–2022) and examines associated hydrological responses via remote sensing (RS) since the early 2000s. The results reveal that: (1) a pronounced ~32-year oscillatory pattern governs both the expansion and contraction of drylands and non-drylands, with China currently in a wetting phase; (2) a distinct climatic transitional zone is identified, and a distinct boundary emerges separating drylands and non-drylands, here referred to as China’s Arid–Humid Divide, reflecting the climatic equilibrium shaped by multiple monsoon systems and local topography; and (3) the nationwide expansion of surface water bodies, following the increase of groundwater storage in partial areas, was detected via recent RS data. These findings provide new insights into the mechanisms driving long-term aridity transitions and support climate adaptation and sustainable land management in China.