The paper used variable infiltration capacity model to simulate the variable process of runoff and soil moisture in the region based on the principle of water and energy balance taking Fenhe river basin in Shanxi province for example. The soil drought index (SDI) was constructed and applied in the study area. The results showed that the VIC model can better simulate the variable process of runoff and soil moisture.The simulated SDI has better relativity with the actual drought. The physical significance of SDI is clear and can better depict the process of occurrence,development and ending in time and space of region drought .The method has certain application value for regional drought monitor.