AbstractWith high spatio‐temporal resolution and wide coverage, satellite‐based precipitation products can potentially fill the deficiencies of traditional in situ gauge precipitation observations and provide an alternative data source for ungauged areas. However, due to the relatively poor accuracy and high uncertainty of satellite‐based precipitation products, it remains necessary to assess the quality and applicability of the products for each investigated area. This study evaluated the accuracy and error of the latest Tropical Rainfall Measuring Mission Multi‐satellites Precipitation Analysis 3B42‐V7 satellite‐based precipitation product and validated the applicability of the product for the Beijiang and Dongjiang River Basins, downstream of the Pearl River Basin in China. The study first evaluated the accuracy, error, and bias of the 3B42‐V7 product during 1998–2006 at daily and monthly scale via comparison with in situ observations. The study further validated the applicability of the product via hydrologic simulation using the variable infiltration capacity hydrological model for three hydrological stations in the Beijiang River Basin, considering two scenarios: a streamflow simulation with gauge‐calibrated parameters (Scenario I) and a simulation after recalibration with the 3B42‐V7 product (Scenario II). The results revealed that (a) the 3B42‐V7 product produced acceptable accuracy both at the daily scale and high accuracy at the monthly scale while generally tending to overestimate precipitation; (b) the product clearly overestimated the frequency of no rainfall events at the grid cell scale and light rainfall (<1 mm/day) events at the region scale and also overestimated the amount of heavy rain (25–50 mm/day) and hard rain (≥50 mm/day) events; (c) under Scenario I, the 3B42‐V7 product performed poorly at three stations with gauge‐calibrated parameters; under Scenario II, the recalibrated model provided significantly improved performance of streamflow simulation with the 3B42‐V7 product; (d) the variable infiltration capacity model has the ability to reveal the hydrological characteristics of the karst landform in the Beijiang Basin when using the 3B42‐V7 product.