© 2017 American Meteorological Society.Guided by a holistic approach, the combined effects of direct and diffuse radiation on the atmospheric boundary layer dynamics over vegetated land are investigated on a daily scale. Three numerical experiments are designed that are aimed at disentangling the role of diffuse and direct radiation below shallow cumulus at the surface and on boundary layer dynamics. A large-eddy simulation (LES) model coupled to a land surface model is used, including a mechanistically immediate response of plants to radiation, temperature, and water vapor deficit changes. The partitioning in direct and diffuse radiation created by clouds and farther inside the canopy is explicitly accounted for. LES results are conditionally averaged as a function of the cloud optical depth. The findings show larger photosynthesis under thin clouds than under clear sky, due to an increase in diffuse radiation and a slight decrease in direct radiation. The reduced canopy resistance is the main driver for the enhanced carbon uptake by vegetation, while the carbon gradient and aerodynamic effects at the surface are secondary. Because of the coupling of CO2 and water vapor exchange through plant stomata, evapotranspiration is also enhanced under thin clouds, albeit to a lesser extent. This effect of diffuse radiation increases the water use efficiency and evaporative fraction under clouds. The dynamic perturbations of the surface fluxes by clouds do not affect general boundary layer or cloud characteristics because of the limited time and space where these perturbations occur. It is concluded that an accurate radiation partitioning calculation is necessary to obtain reliable estimations on local surface processes.