We present results of self-consistent, high-resolution cosmological simulations of galaxy formation at z~3. The simulations employ recently developed recipe for star formation based on the local abundance of molecular hydrogen, which is tracked self-consistently during the course of simulation. The phenomenological H2 formation model accounts for the effects of dissociating UV radiation of stars in each galaxy, as well as self-shielding and shielding of H2 by dust, and therefore allows us to explore effects of lower metallicities and higher UV fluxes prevalent in high redshift galaxies on their star formation. We compare stellar masses, metallicities, and star formation rates of the simulated galaxies to available observations of the Lyman Break Galaxies (LBGs) and find a reasonable agreement. We find that the Kennicutt-Schmidt (KS) relation exhibited by our simulated galaxies at z~3 is substantially steeper and has a lower amplitude than the z=0 relation at Sigma_gas < 100 Msun/pc^2. The predicted relation, however, is consistent with existing observational constraints for the z~3 Damped Lyman $\alpha$ (DLA) and LBGs. Our tests show that the main reason for the difference from the local KS relation is lower metallicity of the ISM in high redshift galaxies. We discuss several implications of the metallicity-dependence of the KS relation for galaxy evolution and interpretation of observations.