Urbanization substantially modifies surface water and energy cycles. Compared to natural vegetation, urban surfaces produce more runoff, trap more heat, and reduce evapotranspiration. Furthermore, hazards like downpours and heatwaves can be amplified in urban spaces due to complex atmospheric feedbacks. To minimize these hazards, many cities are adopting citywide initiatives to “depave” and add tree canopy, which reduce the hydrologic impacts of urbanization and more closely mimic surrounding natural watersheds while also enhancing evaporative cooling and shading. Yet, current representations of urban hydrology in city-to-regional scale climate models do not capture either the hydrologic impacts of these small-scale management efforts nor how the atmosphere responds to them. To this end, we present ensembles of regional climate simulations centered on Milwaukee, Wisconsin that are based on the local green infrastructure initiatives. All simulations use a new custom land surface model that explicitly represents surface hydrology and the highly heterogeneous land cover types that exist in urban areas. We show that with the inclusion of lateral surface water transfers among land types and the urban vegetation associated with green infrastructure practices, water budgets across the city are altered at multiple timescales to increase evapotranspiration and decrease sensible heat fluxes. These changes reduce air temperatures and change regional atmospheric processes such as lake breeze coupling. This work highlights the need to explicitly represent fine-scale urban water and energy cycle components in regional climate simulations, especially when considering the implications of widespread adoption of green infrastructure.