The distribution of vegetation in small catchments is an essential factor determining the generation of runoff during rainstorm events. Using a novel two-dimensional dynamic runoff model, we studied the influence of the distribution of vegetation on rainstorm runoff. First, a kinematic hydrological model of rainstorm events in small watersheds was developed based on a two-dimensional overland flow model. It included canopy interception, surface infiltration, overland flow, and gully flow processes. Data from three rainstorm events in the Heicaohe catchment were then used to verify the model, and good agreement was found. Last, the model was used to examine how the distribution of vegetation and the canopy density affected the runoff process. Model results showed that: First, the vegetation significantly reduces flood discharge and postpones the flood peak, depending on the location and crown density of the vegetation. Second, the efficiency of runoff reduction is substantially higher in downstream and steeply sloped areas (vs. upstream and gently sloping areas), and the degree of crown closure enhances this effect. In fact, in this study, the efficiency of runoff reduction was three times higher in downstream compared with upstream areas, and 30% crown closure resulted in 1.4 times higher efficiency than 20% closure and three times higher than 10% closure.