A new version of the VIC-3L (Three-Layer Variable Infiltration Capacity) model is used to study the impacts of spatially-distributed precipitation and soil heterogeneity on water and energy fluxes within the Blue River basin, OK. The new version of VIC-3L considers the effects of soil heterogeneity on infiltration excess runoff within each modeling grid, in addition to the features of its previous version where the effects of spatial variation of precipitation and soil heterogeneity on saturation excess runoff and other fluxes are taken into account. This study explores how much gain can be achieved if a model (e.g., VIC-3L) that already considers partially the effects of spatial heterogeneity within each modeling grid is operated at higher spatial resolutions, and whether there is a limit on how much spatial resolution can improve simulation results for this type of models. The investigation is carried out at spatial resolutions currently available for radar rainfall and soil property data. This study will also explore the role of a more sophisticated GIS-based routing scheme that is appropriate for distributed models with high spatial resolutions, and the integrated effects of using a high spatial resolution as a modeling computational grid with an appropriate routing scheme. Initial results from the Blue River basin, OK with spatial resolutions of 1/8th and 1/16th degrees will be presented and discussed.