Rangelands in the Southern Great Plains of the United States have been undergoing a rapid transition from herbaceous to woody dominance, primarily owing to encroachment by eastern redcedar, an evergreen juniper species (Juniperus virginiana). Experimental observations at the watershed scale have indicated that conversion of rangelands to eastern redcedar woodlands significantly reduces streamflows. However, whether there are similar effects at larger scales is not known. To address this question, we used the Soil and Water Assessment Tool to simulate changes to the water budget resulting from woody plant encroachment for the lower Cimarron River basin in central Oklahoma. This simulation was based on a hypothetic scenario whereby rangelands in the river basin (51% of the area) were completely replaced by eastern redcedar woodland while other land-use types remained unchanged. The model performed better in simulating the daily streamflow dynamics of the Cimarron River when calibrated with data from the watershed-scale experiments than when calibrated with basin streamflow data. Our results indicate that eastern redcedar encroachment would lead to reduced streamflow throughout the year, with the largest reduction in April and May, due mainly to much smaller surface run-off. The magnitude of streamflow reduction varies along the precipitation gradient. We estimate that under the climate conditions of the period 1988–2009, complete conversion of the rangelands to eastern redcedar woodlands would result in reductions of up to 40% in annual streamflow for the drier, upper portion of the basin, and approximately 20% for the entire basin. Copyright © 2015 John Wiley & Sons, Ltd.