In conjunction with socioeconomic development in watersheds, increasingly challenging problems, such as scarcity of water resources and environmental deterioration, have arisen. Watershed management is a useful tool for dealing with these issues and maintaining sustainable development at the watershed scale. The complex and uncertain characteristics of watershed systems have a great impact on decisions about countermeasures and other techniques that will be applied in the future. An optimization method based on scenario analysis is proposed in this paper as a means of handling watershed management under uncertainty. This method integrates system analysis, forecast methods, and scenario analysis, as well as the contributions of stakeholders and experts, into a comprehensive framework. The proposed method comprises four steps: system analyses, a listing of potential engineering techniques and countermeasures, scenario analyses, and the optimal selection of countermeasures and engineering techniques. The proposed method was applied to the case of the Lake Qionghai watershed in southwestern China, and the results are reported in this paper. This case study demonstrates that the proposed method can be used to deal efficiently with uncertainties at the watershed level. Moreover, this method takes into consideration the interests of different groups, which is crucial for successful watershed management. In particular, social, economic, environmental, and resource systems are all considered in order to improve the applicability of the method. In short, the optimization method based on scenario analysis proposed here is a valuable tool for watershed management.