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A parameterization scheme for the thermal effects of subgrid scale orography is incorporated into a regional climate model (developed at Nanjing University) and its impact on modeling of the surface energy budget over East Asia is evaluated. This scheme includes the effect of terrain slope and orientation on the computation of solar and infrared radiation fluxes at the surface, as well as the surface sensible and latent heat fluxes. Calculations show that subgrid terrain parameters alter the diurnal cycle and horizontal distributions of surface energy budget components. This effect becomes more significant with increased terrain slope, especially in winter. Due to the inclusion of the subgrid topography, the surface area of a model grid box changes over complex terrain areas. Numerical experiments, with and without the subgrid scale topography scheme, show that the parameterization scheme of subgrid scale topography modifies the distribution of the surface energy budget and surface temperature around the Tibetan Plateau. Comparisons with observations indicate that the subgrid topography scheme, implemented in the climate model, reproduces the observed detailed spatial temperature structures at the eastern edge of the Tibetan Plateau and reduces the tendency to overestimate precipitation along the southern coastal areas of China in summer. [ABSTRACT FROM AUTHOR]