Submicrometre-size meteoric smoke aggregates form when interplanetary dust particles ablate and re-coagulate in the Martian atmosphere. The MAVEN (Mars Atmosphere and Volatile Evolution) satellite has detected pervasive ionized metallic layers due to meteor ablation at an 80–90 km altitude, which suggests a continuous supply of meteoric smoke particles that settle to lower altitudes. Until now, meteoric smoke has been neglected in general circulation model studies of the formation of Martian water ice clouds. Here we show that when meteoric smoke is included in simulations of the atmospheric circulation on Mars, mesospheric water ice clouds form at low pressures and in discrete layers, polar hood clouds extend to higher altitudes and the seasonal Hadley cell is weakened. Furthermore, we find that the middle atmosphere water ice clouds respond to and influence the diurnal and semidiurnal migrating thermal tides. We conclude that Mars atmospheric simulations that neglect meteoric smoke do not reproduce the observed spatial distribution of water ice clouds and miss crucial radiative impacts on the overall atmospheric dynamics. Particles from interplanetary dust ablating in Mars’ atmosphere control high-altitude water ice cloud formation, according to numerical simulations of the Martian atmosphere.