AbstractSubsurface tile drainage (TD) is a dominant agriculture water management practice in the United States (US) to enhance crop production in poorly drained soils. Assessments of field‐level or watershed‐level (<50 km2) hydrologic impacts of TD are becoming common; however, a major gap exists in our understanding of regional (>105 km2) impacts of TD on hydrology. The National Water Model (NWM) is a distributed 1‐km resolution hydrological model designed to provide accurate streamflow forecasts at 2.7 million reaches across the US. The current NWM lacks TD representation which adds considerable uncertainty to streamflow forecasts in heavily tile‐drained areas. In this study, we quantify the performance of the NWM with a newly incorporated tile‐drainage scheme over the heavily tile‐drained Midwestern US. Employing a TD scheme enhanced the uncalibrated NWM performance by about 20–50% of the fully calibrated NWM (Calib). The calibrated NWM with tile drainage (CalibTD) showed enhanced accuracy with higher event hit rates and lower false alarm rates than Calib. CalibTD showed better performance in high‐flow estimations as TD increased streamflow peaks (14%), volume (2.3%), and baseflow (11%). Regional water balance analysis indicated that TD significantly reduced surface runoff (−7% to −29%), groundwater recharge (−43% to −50%), evapotranspiration (−7% to −13%), and soil moisture content (−2% to −3%). However, TD significantly increased soil profile lateral flow (27.7%) along with infiltration and soil water storage potential. Overall, our findings highlight the importance of incorporating the TD process into the operational configuration of the NWM.