The Tibetan Plateau (TP) is the roof of the world and water towers of Asia. However, research on hydrological processes is restricted by the sparse gauge network in the TP. The distributed hydrological model is an efficient tool to explore hydrological processes. Meanwhile, the spatial distribution of precipitation directly affects the precision of distributed hydrological modelling. The latest TRMM 3B42 (V7) precipitation was evaluated compared with gauge precipitation at station and basin scales in the Naqu River Basin of the TP. The results show that Tropical Rainfall Measuring Mission (TRMM) precipitation overestimated the precipitation with BIAS of 0.2; the intensity distributions of daily precipitation are consistent in the two precipitation data. TRMM precipitation was then corrected by the good linear relation between monthly areal TRMM precipitation and gauge precipitation, and applied into the Water and Energy Process model. The results indicate that the simulated streamflow using both precipitation data produce a good fit with observed streamflow, especially at monthly scale. Furthermore, the better relations between average slopes and runoff coefficients of sub-basins from the corrected TRMM precipitation-based model implies that the spatial distribution of TRMM precipitation is closer to the spatial distribution of actual precipitation, and has an advantage in driving distributed hydrological models.