Emissions of greenhouse gases and aerosols from human activities continue to alter the climate and likely will have significant impacts on the terrestrial hydrological cycle and water quality, especially in arid and semiarid regions. We applied an improved Soil and Water Assessment Tool (SWAT) to evaluate impacts of increased atmospheric CO2 concentration and potential climate change on the water cycle and nitrogen loads in the semiarid James River Basin (JRB) in the Midwestern United States. We assessed responses of water yield, soil water content, groundwater recharge, and nitrate nitrogen (NO3–N) load under hypothetical climate-sensitivity scenarios in terms of CO2, precipitation, and air temperature. We extended our predictions of the dynamics of these hydrological variables into the mid-21st century with downscaled climate projections integrated across output from six General Circulation Models. Our simulation results compared against the baseline period 1980 to 2009 suggest the JRB hydrological system is highly responsive to rising levels of CO2 concentration and potential climate change. Under our scenarios, substantial decrease in precipitation and increase in air temperature by the mid-21st century could result in significant reduction in water yield, soil water content, and groundwater recharge. Our model also estimated decreased NO3–N load to streams, which could be beneficial, but a concomitant increase in NO3–N concentration due to a decrease in streamflow likely would degrade stream water and threaten aquatic ecosystems. These results highlight possible risks of drought, water supply shortage, and water quality degradation in this basin.