The role of nitrogen limitation on photosynthesis downregulation and stomatal conductance has a significant influence on evapotranspiration and runoff. In the current Community Land Model with coupled Carbon and Nitrogen cycles (CLM4-CN), however, the carbon and water coupling in stomata is not linked to nitrogen limitation. We modify the incomplete linkages between carbon, nitrogen, and water, and examine how nitrogen limitation affects hydrological processes in CLM4-CN. We then evaluate if the modification can improve the simulation of carbon and water fluxes. Applying the effects of nitrogen limitation on stomatal conductance significantly decreases leaf photosynthesis. It leads to a reduction in canopy transpiration, thereby increasing total runoff, mainly due to increasing subsurface runoff. More available soil water for vegetation from the reduced transpiration helps increase gross primary productivity (GPP) in the relatively moisture-limited regions of grassland/steppe and savanna. However, in the tropics and boreal forest regions, changes in soil water by nitrogen limitation are insignificant, and GPP decreases directly by down-regulated leaf photosynthesis. Decreasing canopy transpiration and increasing runoff from nitrogen limitation improve simulating latent heat flux and runoff by reducing high biases for latent heat flux in the tropics and low biases for runoff in the tropics and northern high latitudes. In addition, the CLM4-CN with leaf-level nitrogen limitation reduces model biases in tropical GPP. Nitrogen limitation on the leaf-level significantly affects hydrological processes in CLM4-CN and improves the simulation of carbon and water fluxes. This process should be included with other recent improvements to reduce model biases as much as possible.