Climate change is affecting the hydrology of high‐elevation mountain ecosystems, with implications for ecosystem functioning and water availability to downstream populations. We directly and continuously measured precipitation and evapotranspiration (ET) from both subalpine forest and alpine tundra portions of a single catchment, as well as discharge fluxes at the catchment outlet, to quantify the water balance of a mountainous, headwater catchment in Colorado, USA. Between 2008 and 2012, the water balance closure averaged 90% annually, and the catchment ET was the largest water output at 66% of precipitation. Alpine ET was greatest during the winter, in part because of sublimation from blowing snow, which contributed from 27% to 48% of the alpine, and 6% to 9% of the catchment water balance, respectively. The subalpine ET peaked in summer. Alpine areas generated the majority of the catchment discharge, despite covering only 31% of the catchment area. Although the average annual alpine runoff efficiency (discharge/precipitation; 40%) was greater than the subalpine runoff efficiency (19%), the subalpine runoff efficiency was more sensitive to changes in precipitation. Inter‐annual analysis of the evaporative and dryness indices revealed persistent moisture limitations at the catchment scale, although the alpine alternated between energy‐limited and water‐limited states in wet and dry years. Each ecosystem generally over‐generated discharge relative to that expected from a Budyko‐type model. The alpine and catchment water yields were relatively unaffected by annual meteorological variability, but this interpretation was dependent on the method used to quantify potential ET. Our results indicate that correctly accounting for dissimilar hydrological cycling above and below alpine treeline is critical to quantify the water balance of high‐elevation mountain catchments over periods of meteorological variability.