High‐resolution modeling became popular in recent years due to the availability of multisource observations, advances in understanding fine‐scale processes, and improvements in computing facilities. However, modeling of hydrological changes over mountainous regions is still a great challenge due to the sensitivity of highland water cycle to global warming, tightly coupled hydrothermal processes, and limited observations. Here we show a successful high‐resolution (3 km) land surface modeling over the Sanjiangyuan region located in the eastern Tibetan plateau, which is the headwater of three major Asian rivers. By developing a new version of a Conjunctive Surface‐Subsurface Process model named as CSSPv2, we increased Nash‐Sutcliffe efficiency by 62–130% for streamflow simulations due to the introduction of a storage‐based runoff generation scheme, reduced errors by up to 31% for soil moisture modeling after considering the effect of soil organic matter on porosity and hydraulic conductivity. Compared with ERA‐Interim and Global Land Data Assimilation System version 1.0 reanalysis products, CSSPv2 reduced errors by up to 30%, 69%, 92%, and 40% for soil moisture, soil temperature, evapotranspiration, and terrestrial water storage change, respectively, as evaluated against in situ and satellite observations. Moreover, CSSPv2 well captured the elevation‐dependent ground temperature warming trends and the decreased frozen dates during 1979–2014, and significant increasing trends (p < 0.05) in evapotranspiration and terrestrial water storage during 1982–2011 and 2003–2014 respectively, while ERA‐Interim and Global Land Data Assimilation System version 1.0 showed no trends or even negative trends. This study implies the necessity of developing high‐resolution land surface models in realistically representing hydrological changes over highland areas that are sentinels to climate change.