Abstract: Global climate change is exerting profound and increasingly evident impacts on the spatio-temporal distribution of water resources and the effectiveness of established management strategies. This challenge is particularly pronounced in regions marked by inherent water resource heterogeneity, such as the monsoon-dominated eastern part of China. The eastern sector of the Central Water Tower, which includes the crucial source area for the Middle Route of the South-to-North Water Diversion Project, constitutes a key hydrological zone where understanding long-term variability and its driving forces is essential for sustainable water security. This study adopts a novel approach to extract and interpret the complex hydrologic dynamics of this region over the past four centuries by leveraging the unique climatic and hydrologic records preserved in tree rings. To this end, six robust regional hydrological reconstruction sequences based on high-quality tree-ring width chronologies were selected. These reconstructions offer a continuous, annually resolved perspective on historical water availability. Using a nested principal component analysis (nested PCA) method, we synthesized these sequences to uncover composite hydrologic behavior and intrinsic variability patterns across the eastern Central Water Tower. This advanced analytical technique efficiently isolates dominant modes of shared variability while retaining critical spatial and temporal information across multiple timescales. Our findings delineate a complex record of hydrologic fluctuations extending over 400 years. The reconstructed record reveals nine distinct wet periods interspersed with eight major drought intervals. Additionally, the analysis identifies 23 years marked by extreme high-water conditions and 30 years characterized by pronounced low-water anomalies, underscoring the region’s vulnerability to severe hydrological extremes. Spectral analysis of the reconstructed series uncovers significant quasi-periodic components embedded within the long-term hydrologic variability. These recurrent oscillations occur at intervals of approximately 2.4–2.9 years, 3.8–3.9 years, 8.6 years, 12.9–13.6 years, 22.2–25.5 years, and a notably longer cycle of roughly 73.0 years. These periodicities suggest potential associations with known climate modes operating across interannual to multidecadal timescales. Spatial response analyses highlight the key drivers of water resource dynamics: regional precipitation emerges as the dominant factor controlling water recharge in the eastern Central Water Tower, while elevated temperatures significantly intensify evaporative losses, placing substantial stress on water storage capacity—especially during warmer periods. The reconstructed hydrologic variations show a strong correlation with historically documented episodes of extreme droughts and floods across China. Notably, a statistical association is identified between episodes of pronounced hydrological stress and periods coinciding with the decline of historical dynasties, suggesting that prolonged water resource challenges may have contributed to social instability—a poignant historical warning. Crucially, the study demonstrates that large-scale Pacific climate variability, primarily driven by phase shifts in the El Niño–Southern Oscillation (ENSO) and the Interdecadal Pacific Oscillation (IPO), exerts a dominant influence on the region’s hydrology. These climate modes affect the eastern Central Water Tower by fundamentally altering major atmospheric circulation systems, particularly the Pacific Walker Circulation (PWC). Such alterations regulate the vital transport of moisture from ocean to land, thereby directly controlling precipitation inputs to the source region. A significant finding of this research is the identification of a cross-scale coupling between hydrological processes within the source area and those in the geographically distant receiving region. This teleconnection pattern has shown a marked strengthening trend throughout the 21st century, indicating increasing interdependence influenced by large-scale climate dynamics. The convergence of these findings highlights a critical and urgent challenge. The eastern Central Water Tower faces heightened vulnerability to future climate change, which threatens to introduce greater exogenous uncertainties in water resources and amplify cascading risks across interconnected systems. Therefore, proactive and enhanced strategies for water resource scheduling, allocation, and adaptive management are imperative. Such measures are essential not only to mitigate projected impacts of climatic variability on water availability but also to safeguard the sustainable supply of water and ensure the long-term operational stability and resilience of the strategically vital South-to-North Water Diversion Project amid a changing climate.