Terrestrial carbon fluxes are crucial to the global carbon cycle. Quantification of terrestrial carbon fluxes over the Tibetan Plateau (TP) has considerable uncertainties due to the unique ecosystem and climate and scarce flux observations. This study evaluated our recent improvement of terrestrial flux parameterization in the weather research and forecasting model coupled with the vegetation photosynthesis and respiration model (WRF-VPRM) in terms of reproducing observed net ecosystem exchange (NEE), gross ecosystem exchange (GEE), and ecosystem respiration (ER) over the TP. The improvement of VPRM relative to the officially released version considers the impact of water stress on terrestrial fluxes, making it superior to the officially released model due to its reductions in bias, root mean square error (RMSE), and ratio of standard deviation (RSD) of NEE to 0.850 μmol·m−2·s−1, 0.315 μmol·m−2·s−1, and 0.001, respectively. The improved VPRM also affects GEE simulation, increasing its RSD to 0.467 and decreasing its bias and RMSE by 1.175 and 0.324 μmol·m−2·s−1, respectively. Furthermore, bias and RMSE for ER were lowered to −0.417 and 0.954 μmol·m−2·s−1, with a corresponding increase in RSD by 0.6. The improved WRF-VPRM simulation indicates that eastward winds drive the transfer of lower CO2 concentrations from the eastern to the central and western TP and the influx of low-concentration CO2 inhibits biospheric CO2 uptake. The use of an improved WRF-VPRM in this study helps to reduce errors, improve our understanding of the role of carbon flux cycle over the TP, and ultimately reduce uncertainty in the carbon flux budget.