Mountain vegetation in dryland regions is highly sensitive to climatic variability, particularly changes in water availability and atmospheric demand. This study assessed the relationships between vegetation coverage and climatic factors in the Chinese Altay Mountains from 2000 to 2024 using MODIS NDVI data, meteorological observations, drought indices, and extreme climate indicators. Pixel-based correlation analysis and directional interaction classification were used to evaluate the spatial consistency and divergence between vegetation dynamics and climate variability. The results showed that water availability was the dominant factor controlling vegetation cover. Annual precipitation, SPEI, and precipitation-related extreme indices were generally positively associated with vegetation coverage, whereas warmth-related indices such as GSL, WSDI, and TX90 were mostly negatively associated with vegetation coverage. Temperature showed a spatially variable effect, with warming tending to suppress vegetation in water-limited low- and middle-elevation areas but potentially benefiting vegetation in cold-limited high-elevation zones. SPEI showed a more consistent relationship with vegetation coverage than TVDI, indicating that cumulative climatic water balance better captured regional vegetation drought responses than surface dryness alone. These findings highlight the importance of vegetation-atmosphere water deficit in regulating mountain vegetation dynamics and provide a scientific basis for ecological conservation and water resource management in the Altay Mountains.