Parameter sensitivity of the Distributed Hydrology‐Soil‐Vegetation Model (DHSVM) was studied in two contrasting environments: (1) Pang Khum Experimental Watershed (PKEW) in tropical northern Thailand; and (2) Cedar River basin (CRB) in Washington State of the temperate US Pacific Northwest. The analysis shows that for both basins, the most sensitive soil parameters were porosity, lateral saturated hydraulic conductivity, and the exponential decrease rate of lateral saturated hydraulic conductivity with soil depth. The most sensitive vegetation parameters were leaf area index, vegetation height, vapour pressure deficit, minimum stomatal resistance (for both grassland and forest scenarios), hemisphere fractional coverage, overstory fractional coverage, and trunk space (for the forest scenario only). Parameter sensitivity was basin‐specific, with the humid, temperate CRB being more influenced by vegetation parameters, while tropical PKEW was more influenced by soil properties. Increases and decreases in parameter values resulted in opposite and unequal changes in bias and root mean square error (RMSE), indicating the non‐linearity of physical process represented in the hydrological model. Copyright © 2011 Wiley, Ltd.