The purpose of the study is to explore the potentiality of rainwater resources of small watershed in soil stone mountain region of North China, Which can not only provide scientific basis for soil and water loss harness, but also for raising the rainwater use rate and rainwater use efficiency. By choosing small watershed in hilly area of middle southern part of Shandong province as the typical experimental site, on the basis of the calculating methods of theory and practical potentiality of rainwater resources, the potentiality of rainwater resources and its sup- ply-demand balance are analysis. Results showed that the percentage of ecological demand water is the largest in the total demand water amount of small watershed, it is 68.11 % of the total demand water amount, and the percentage of agricultural production demand water is the next, it is 31.37 % of the total demand water amount, and the smallest is life demand water amount, it is only 0.52 % of the total demand water amount. Under the different rainfall frequencies of 50%, 75% and 95%, the demand water amount of the small watershed is 63%, 75.2M and 101.7M of the supply water amount respectively. So the small watershed in the experimental site is being in condition of serious shortage water. Moreover, this paper also proposes the main direction of water resources development and utilization of small watershed in hilly area of middle southern part of Shandong province.