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Reliable precipitation simulation over the Tibetan Plateau (TP) remains a challenge, manifested by a prominent systematic wet bias in the warm season. Previous studies have generally neglected the potential linkage between surface radiation energy budget and precipitation bias. Prevalent scattered cumulus and thunderstorms over the TP in summer strongly influence surface radiation. A cloud fraction scheme considering subgrid temperature and humidity fluctuations is implemented in the WRF model and tested for a month‐long simulation. It is found that the scheme better reproduces the surface solar radiation compared to a default cloud fraction scheme in the WRF model. Using abundant surface observations, we find that overestimation of the downward surface shortwave radiation (DSSR) would lead to wet bias. DSSR overestimation contributes to higher surface temperature and larger evaporation and enhanced atmospheric instability, which favor more simulated convective precipitation. The study suggests that a better simulation of clouds and surface radiation would benefit precipitation simulation over the plateau. Plain Language Summary: Summer precipitation over the Tibetan Plateau (TP) is generally overestimated in general circulation models as well as regional weather forecasts and climate models. The prevailing "popcorn‐like" clouds over the TP in summer would strongly impact surface radiation. Considering the potential linkage between surface radiation energy budget and precipitation bias, a statistical cloud fraction and subgrid condensation scheme (GS‐PDF scheme) is implemented in the WRF model and tested for a month‐long simulation. The GS‐PDF scheme better captures clouds over the TP with more mid‐low cloud water (ice) than the default Xu‐Randall scheme. Increased mid‐low cloud water in the GS‐PDF scheme reduced simulated downward surface shortwave radiation, reduced simulated surface temperatures, atmospheric instabilities and convective precipitation, leading to alleviated wet bias over the TP. This study suggests that better simulations of cloud and surface radiation would be beneficial for simulations of hydrological cycles over the TP. Key Points: A new cloud macrophysics scheme considering subgrid temperature and humidity fluctuations is implemented in the WRF modelThe new macrophysics scheme reduced simulated downward surface shortwave radiation, surface temperatures and atmospheric instabilitiesA better simulation of clouds and surface radiation would benefit precipitation simulation over the Tibetan Plateau [ABSTRACT FROM AUTHOR]