The 3‐D hydrodynamics of storm surge events, including the effects of vegetation and impact on onshore transport of marine sediment, have important consequences for coastal communities. Here, complex storm surge dynamics during Hurricane Ike are investigated using a three‐dimensional (3‐D), vegetation‐resolving storm surge‐wave model (CH3D‐SWAN) which includes such effects of vegetation as profile drag, skin friction, and production, dissipation, and transport of turbulence. This vegetation‐resolving 3‐D model features a turbulent kinetic energy (TKE) closure model, which uses momentum equations with vegetation‐induced profile and skin friction drags, a dynamic q2 equation including turbulence production and dissipation by vegetation, as well as vegetation‐dependent algebraic length‐scale equations, and a Smagorinsky‐type horizontal turbulence model. This vegetation model has been verified using extensive laboratory tests, but this study is a comparison of 2‐D and 3‐D simulations of complex storm surge dynamics during Hurricane Ike. We examine the value of 3‐D storm surge models relative to 2‐D models for simulating coastal currents, effects of vegetation on surge, and sediment transport during storm events. Comparisons are made between results obtained using simple 2‐D formulations for bottom friction, the Manning coefficient (MC) approach, and physics‐based 3‐D vegetation‐modeling (VM) approach. Last, the role that the 3‐D hydrodynamics on onshore transport and deposition of marine sediments during the storm is investigated. While both the 3‐D and 2‐D results simulated the water level dynamics, results of the physics‐based 3‐D VM approach, as compared to the 2‐D MC approach, more accurately captures the complex storm surge dynamics.