Fresh water availability was an important variable that influenced prehistoric human settlement on California's northern Channel Islands. Previous attempts to understand settlement on the islands use watershed size as a proxy for water at canyon mouths. In semi‐arid regions, this approach has limitations because streams may lose much or all of their flow to groundwater. We developed a distributed hydrological model for Santa Rosa Island that incorporates geospatial and temporal data for climate (precipitation, solar radiation, wind speed, relative humidity, temperature), soils, vegetation, and topography to simulate the complex land‐surface‐groundwater behavior of island hydrology for hypothetical wet, dry, and median centuries. Our simulations show that water flow is greatest in drainages on the northwest and east coasts of the island. This correlates with some of the earliest and most persistent settlement on the island. During the most extreme droughts of the last 2000 years during the Medieval Climatic Anomaly (1150–600 cal BP), island populations contracted to a small number of large coastal villages. We argue that this was related in part to the greater availability of surface water at these locations. This study expands the theoretical and methodological scope of past studies that have applied hydrological simulation to archaeological investigations.