In this study, kinetic energy budget equations of rotational and divergent flow in pressure coordinates are derived on terrain-following coordinates. The new formulation explicitly shows the terrain effects and can be applied directly to model-simulated dynamic and thermodynamic fields on the model’s original vertical grid. Such application eliminates interpolation error and avoids errors in virtual weather systems in mountainous areas. These advantages and their significance are demonstrated by a numerical study in terrain-following coordinates of a developing vortex after it moves over the Tibetan Plateau in China.