This work presents a new variational scheme for assimilation of near surface soil moisture into the Three Layer Variable Infiltration Capacity (VIC-3L) hydrologically based land surface model. The assimilation framework provides an explicit and realistic representation of the uncertainties involved in the observations and model predictions of soil moisture states. It also assures that optimal states are appropriately constrained so that energy and mass are conserved within VIC-3L and corrections propagate throughout the model. The soil moisture images derived from electronically scanned thin array radiometer (ESTAR) during the Southern Great Plains Hydrology Experiment of 1997 (SGP97) are utilized. A comprehensive evaluation of the improvements in predictive ability of the VIC-3L model due to the assmilation of near surface soil moisture is also provided.