Small precipitation events (≤5 mm) are a key component of the precipitation regimes of dry regions in the United States. Understanding their importance is useful, but exploring their significance for water balance processes is of utmost consequence for our knowledge about the functioning of ecosystems and their responses to climate change. Our objective was to evaluate the implications of precipitation event size distributions for the partitioning of water loss between evaporation and transpiration and for the number of days with wet soil. We used sites from the Great Plains of the United States to provide long-term weather data for our simulation analyses. Our simulations varied distributions of precipitation event size and potential evapotranspiration (PET) for two contrasting soils: a sandy loam with low water holding capacity and a silt loam with high water holding capacity. Event size and specifically the numerical importance of the smallest size (0–5 mm) was the most important control on our results. Soil water holding capacity and PET were important modifiers of the responses. The ratio of evaporation to actual evapotranspiration (E/AET) increased as the percentage of small events increased and as PET increased. E/AET was greater for all combinations of event size and PET for the silt loam than for the sandy loam soils. The number of days with wet soil decreased as small events and PET increased. Our results suggest that the number of small events is one of the most important controls on water balance processes in arid and semiarid regions. Copyright © 2011 John Wiley & Sons, Ltd.