Large-scale ecological restoration has enhanced ecosystem services, but its impacts on terrestrial water storage (TWS) remain debated. Our study challenges the prevailing assumption that restoration activities inevitably reduce TWS. Here we construct a long-term TWS record (1987-2020) to analyze hydrological dynamics in the Mu Us Sandyland in China, a region undergoing intensified ecological restoration since 1999. Our findings delineate three distinct hydrological phases: stable pre-restoration conditions (1987-1998), rapid TWS depletion (2003-2010), and subsequent unintended recovery (2011-2020). Satellite and modeling data reveal that ecological restoration and agricultural expansion initially reduce TWS through enhanced plant transpiration, while vegetation-mediated atmospheric feedback later appears to boost regional precipitation. Climate projections suggest this region may experience 51%-351% TWS growth by 2100 even under the climate-resilient SSP1-2.6 scenario, potentially supporting regional water sustainability. These findings revise our understanding of ecological-water interactions, showing that well-designed ecological restoration may overcome initial water deficits through climate system adaptation.