Several Andean countries have planned to restore forest cover in degraded and deforested land to enhance the provision of ecosystem services to society. In the Andean region, reduced water availability has been attributed to past forestation with exotic species thus fueling debate. Whereas the impact of forestation on water supply and regulation has been largely studied worldwide, critical information is missing in the context of Andean ecosystems where water scarcity is common along with steep terrain that favors soil erosion and landslides. To inform sound decision-making on forestation, we reviewed scientific evidence on the impact of forestation on water supply, water flow regulation, and soil erosion in the Andes. Following systematic review protocols, we searched peer-reviewed articles and unpublished thesis and reports. We synthesized studies using different methods, including meta-analyses and meta-regression. Forestation had clear positive impacts in degraded soils, through reducing soil erosion, increasing water infiltration, and improving low flows. However, total water supply was reduced by increased evapotranspiration of tree cover. At high elevations, restoration of Andean grasslands led to better hydrological outcomes than forestation. This is due to the good hydrological properties of grasslands and the detrimental effects of replacing them by exotic tree plantations. Forestation significantly reduced soil organic matter (an indicator of hydrological services and erosion regulation). However, land-use history before forestation had more effect on soil organic matter than, for example, management type, species planted, or age since planting. Important knowledge gaps include the impact of forestation on landslides susceptibility, water use efficiency, and potential differences in the impact of forestation between native and exotic species.