AbstractAdequate representation of the subgrid‐scale (SGS) turbulent fluxes associated with convective clouds in the eyewall and rainbands above the boundary layer is important for simulating the formation of tropical cyclone (TC) dynamic and thermal structure, as well as the evolution and intensification of the TC. Two sets of benchmark large‐eddy simulations (LESs) for an idealized TC during the rapid intensification and mature stages were conducted. The turbulent transport above the boundary layer in the TC eyewall and rainbands exhibits a remarkable countergradient characteristic, which is poorly represented by the traditional eddy‐diffusivity closure. In contrast, the H‐gradient closure based on the horizontal gradients of the resolved variables is capable of accurately capturing the countergradient features and exhibiting a spatial distribution of SGS fluxes that mimics much better the coarse‐grained fluxes from the LES benchmarks. Moreover, the H‐gradient closure allows for the backscatter transfer of energy. By implementing the H‐gradient closure into a three‐dimensional turbulence parameterization, the TC simulated using the modified parameterization bears closer resemblance to the LES benchmarks in terms of the spatial distribution of SGS fluxes, TC intensity, primary and secondary circulations, and cloud morphology.