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Abstract The presence of ice in soil dramatically alters soil hydrologic and thermal properties. Despite this important role, many recent studies show that explicitly including the hydrologic effects of soil ice in land surface models degrades the simulation of runoff in cold regions. This paper addresses this dilemma by employing the Community Land Model version 2.0 (CLM2.0) developed at the National Center for Atmospheric Research (NCAR) and a simple TOPMODEL-based runoff scheme (SIMTOP). CLM2.0/SIMTOP explicitly computes soil ice content and its modifications to soil hydrologic and thermal properties. However, the frozen soil scheme has a tendency to produce a completely frozen soil (100% ice content) whenever the soil temperature is below 0°C. The frozen ground prevents infiltration of snowmelt or rainfall, thereby resulting in earlier- and higher-than-observed springtime runoff. This paper presents modifications to the above-mentioned frozen soil scheme that produce more accurate magnitude and seasonality of runoff and soil water storage. These modifications include 1) allowing liquid water to coexist with ice in the soil over a wide range of temperatures below 0°C by using the freezing-point depression equation, 2) computing the vertical water fluxes by introducing the concept of a fractional permeable area, which partitions the model grid into an impermeable part (no vertical water flow) and a permeable part, and 3) using the total soil moisture (liquid water and ice) to calculate the soil matric potential and hydraulic conductivity. The performance of CLM2.0/SIMTOP with these changes has been tested using observed data in cold-region river basins of various spatial scales. Compared to the CLM2.0/SIMTOP frozen soil scheme, the modified scheme produces monthly runoff that compares more favorably with that estimated by the University of New Hampshire–Global Runoff Data Center and a terrestrial water storage change that is in closer agreement with that measured by the Gravity Recovery and Climate Experiment (GRACE) satellites.