Wetlands are an important land type – they provide vital ecosystem services such as regulating floods, storing carbon, and providing wildlife habitat. The ability to simulate their spatial extent and hydrological processes is important for valuing wetlands’ function. The purpose of this study is to dynamically simulate wetlands’ hydrological processes and their feedback to the regional climate in the Prairie Pothole Region (PPR) of North America, where a large number of wetlands exist. In this study, we incorporated a wetland scheme into the Noah-MP Land Surface Model with two major modifications: (1) modifying the sub-grid saturation fraction for spatial wetland extent; (2) incorporating a dynamic water storage to simulate hydrological processes. This scheme was tested at a fen site in central Saskatchewan, Canada and applied regionally in the PPR with 13-year climate forcing produced by a high-resolution convection-permitting model. The differences between wetland and no-wetland simulations are significant, with increasing latent heat and evapotranspiration while decreasing sensible heat and runoff. Finally, the dynamic wetland scheme was tested using the coupled WRF model, showing an evident cooling effect of 1~3℃ in summer where wetlands are abundant. In particular, the wetland simulation shows reduction in the number of hot days for more than 10 days over the summer of 2006, when a long-lasting heatwave occurred. This research has great implications for land surface/regional climate modeling, as well as wetland conservation, for valuing wetlands in providing a moisture source and mitigating extreme heatwaves, especially under climate change.