Droughts and heatwaves impact human and natural systems in Australia, and groundwater helps ecosystems survive these extremes. However, how groundwater affects land-atmosphere interactions during droughts and heatwaves has rarely been examined. This thesis explores the influence of groundwater on the impact and the intensity of heatwaves and droughts, focusing on southeast Australia, by using the Community Atmosphere-Biosphere Land Exchange (CABLE) land surface model (LSM). First, this thesis evaluates multiple ways to represent key processes in CABLE using a comprehensive set of observations in an Australian water-limited site. CABLE simulates the land hydrology during droughts and heatwaves well, if high-resolution observations of evaporation and root zone processes are available to configure the model and to select appropriate parameterizations. The results highlight both the opportunity and the challenge in improving LSMs for simulating droughts and heatwaves well. Second, using the most realistic model configuration from the model evaluation step, this thesis examines how groundwater influences ecosystems during co-occurring heatwaves and droughts. Results demonstrate the importance of groundwater in sustaining transpiration for the first 1–2 years of multi-year droughts. Results also demonstrate how the lack of deep roots or stomatal closure under high vapour pressure deficit or high temperature can reduce the role of groundwater. Given these are not always represented in LSMs, these results indicate the potential for overestimating the impact of droughts and heatwaves in climate model simulations. Third, coupled experiments using Weather Research and Forecasting (WRF) and CABLE examined the influence of groundwater on heatwave intensity in southeast Australia. Results show that groundwater moistens and cools both the land surface and atmospheric boundary layer during heatwaves. Groundwater reduces maximum air temperatures near the surface by up to 3 °C, and by up to 1 °C through the atmospheric boundary layer, but only where the water table depth was shallow, and overlain by forests. Overall, this work quantifies the impact of groundwater on heatwave intensity and identifies the impacted regions over southeast Australia. The thesis concludes with areas for future model development, with the goal of further improving the simulations of heatwaves and droughts which are projected to increase in many regions of the world due to climate change.