AbstractThe structure and evolution of the atmospheric boundary layer (ABL) under clear‐sky fair weather conditions over mountainous terrain is dominated by the diurnal cycle of the surface energy balance and thus strongly depends on surface snow cover. We use data from three passive ground‐based infrared spectrometers deployed in the East River Valley in Colorado's Rocky Mountains to investigate the response of the thermal ABL structure to changes in surface energy balance during the seasonal transition from low to high snow cover. Temperature profiles were retrieved from the infrared radiances using the optimal estimation physical retrieval Tropospheric Remotely Observed Profiling via Optimal Estimation. A nocturnal surface inversion formed in the valley during clear‐sky days, which was subsequently mixed out during daytime with the development of a convective boundary layer when snow cover was low. Over high snow cover, a very shallow convective boundary layer formed, above which the inversion persisted through the daytime hours. We compare these observations to NOAA's operational High‐Resolution‐Rapid‐Refresh model and find large warm biases on clear‐sky days resulting from the model's inability to form strong nocturnal inversions and to maintain the stable stratification in the valley during daytime when there was snow on the ground. We suggest several factors contributing to the large model errors. These are (a) the inability of the model to represent well‐developed thermally driven flows likely due to the too coarse horizontal grid spacing (3 km), (b) too much convective mixing during daytime, and (c) too strong vertical coupling between the valley atmosphere and the free troposphere.