CABLE is a global land surface model, which has been used extensively in offline and coupled simulations. While CABLE performs well in comparison with other land surface models, results are impacted by decoupling of tran- spiration and photosynthesis fluxes under drying soil con- ditions, often leading to implausibly high water use effi- ciencies. Here, we present a solution to this problem, en- suring that modelled transpiration is always consistent with modelled photosynthesis, while introducing a parsimonious single-parameter drought response function which is coupled to root water uptake. We further improve CABLE’s simula- tion of coupled soil–canopy processes by introducing an al- ternative hydrology model with a physically accurate repre- sentation of coupled energy and water fluxes at the soil–air interface, including a more realistic formulation of transfer under atmospherically stable conditions within the canopy and in the presence of leaf litter. The effects of these model developments are assessed using data from 18 stations from the global eddy covariance FLUXNET database, selected to span a large climatic range. Marked improvements are demonstrated, with root mean squared errors for monthly la- tent heat fluxes and water use efficiencies being reduced by 40 %. Results highlight the important roles of deep soil mois- ture in mediating drought response and litter in dampening soil evaporation.