This paper examines the accuracy of high-resolution nested mesoscale model simulations of surface climate. The nesting capabilities of the atmospheric fifth-generation Pennsylvania State University (PSU)-National Center for Atmospheric Research (NCAR) Mesoscale Model (MM5) were used to create high-resolution, 5-yr climate simulations ( from 1 October 1994 through 30 September 1999), starting with a coarse nest of 20 km for the western United States. During this 5-yr period, two finer-resolution nests ( 5 and 1.7 km) were run over the Yampa River basin in northwestern Colorado. Raw and bias-corrected daily precipitation and maximum and minimum temperature time series from the three MM5 nests were used as input to the U. S. Geological Survey's distributed hydrologic model [ the Precipitation Runoff Modeling System (PRMS)] and were compared with PRMS results using measured climate station data. The distributed capabilities of PRMS were provided by partitioning the Yampa River basin into hydrologic response units (HRUs). In addition to the classic polygon method of HRU definition, HRUs for PRMS were defined based on the three MM5 nests. This resulted in 16 datasets being tested using PRMS. The input datasets were derived using measured station data and raw and bias-corrected MM5 20-, 5-, and 1.7-km output distributed to 1) polygon HRUs and 2) 20-, 5-, and 1.7-km-gridded HRUs, respectively. Each dataset was calibrated independently, using a multiobjective, stepwise automated procedure. Final results showed a general increase in the accuracy of simulated runoff with an increase in HRU resolution. In all steps of the calibration procedure, the station-based simulations of runoff showed higher accuracy than the MM5-based simulations, although the accuracy of MM5 simulations was close to station data for the high-resolution nests. Further work is warranted in identifying the causes of the biases in MM5 local climate simulations and developing methods to remove them.