Significant advancements in satellite‐based precipitation retrieval algorithms have led to the development of continuous, quasi‐global precipitation products, offering unique opportunities for hydrometeorological and climate research. In this context, six satellite‐based precipitation products (SPPs), including CHIRPS, CMORPH, GSMaP, IMERG, MSWEP, and PERSIANN, were thoroughly investigated for their application in hydrological simulations over the Wardha River basin in India. The observed gridded precipitation product developed by India Meteorological Department (IMD) has been used as reference data to evaluate the performance of SPPs. Hydrological variables such as runoff, soil moisture (SM) and evapotranspiration (ET) were simulated using the Variable Infiltration Capacity model. The performances of SPPs are critically assessed using various statistical metrics, including Pearson's correlation coefficient (R), Klinga‐Gupta Efficiency (KGE), Percent Bias (PBIAS), root mean square error (RMSE), and the RMSE to standard deviation ratio (RSR). The model‐simulated discharge was compared with streamflow observations at a single gauging site, while a spatially distributed comparison was conducted between simulated SM and ET and satellite‐based SM and ET. The IMD dataset consistently shows superior performance for discharge simulation at both daily and monthly scales, with KGE values of 0.85 and 0.91, respectively. Among SPPs, MSWEP and CHIRPS excel in simulating daily and monthly discharge, respectively. For ET simulation, CHIRPS outperforms IMD and other SPPs, achieving an overall KGE value of 0.37. In contrast, PERSIANN is the most effective for simulating SM compared to other precipitation products.