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All current global climate models (GCMs) only utilize grid-averaged surface heat fluxes to drive the atmosphere, and thus, their subgrid horizontal variations and partitioning are absent. This can result in many simulation biases. To address this shortcoming, a novel parameterization scheme considering the subgrid variations of the sensible and latent heat fluxes to the atmosphere and the associated partitioning is developed and implemented into the National Center for Atmospheric Research (NCAR) Climate Earth System Model 1.2 (CESM1.2). The evaluations show that in addition to the improved boreal summer precipitation simulation over eastern China and the coastal areas of the Bay of Bengal, the longstanding overestimations of precipitation on the southern and eastern margins of the Tibetan Plateau (TP) in most GCMs are significantly mitigated. The improved precipitation simulation on the southern and eastern margins of the TP is from suppressed large-scale precipitation. Moisture advection for precipitation production is blocked toward the southern edge of the TP, and the intensity of the moisture transport to the eastern edge is weakened. The corrected large-scale circulation in the lower atmosphere due to the realistic simulations of the grid-scale surface radiative and heat fluxes is responsible for the change in moisture transport. In terms of global annual mean states, some improvements are obtained by the new scheme compared to the default CESM1.2 and the scheme stochastically allocating the subgrid surface heat fluxes to the atmosphere (i.e., without subgrid partitioning included). This study highlights the importance of subgrid surface energy variations and partitioning to the atmosphere in the simulation of the hydrological and energy cycles in GCMs. [ABSTRACT FROM AUTHOR]