Because of the necessary simplification of the complex natural processes and the limited availability of observations, model simulations are always uncertain and this uncertainty should be quantified. In this contribution, the model error is quantified using a combined procedure. For the uncertainty of discharge due to meteorological input, a stochastic simulation method is used. To quantify the effect of process representation and parameterization, a sensitivity analysis is carried out. It is assumed that the model error due to process uncertainty is proportional to the sensitivity. The final model error variance can thus be calculated from the stochastic errors and the process sensitivities. The coefficients used for the quantification are estimated simultaneously with the model parameters. The methodology presented produces error series that are normally distributed and that represent the varying importance of different processes in time. This uncertainty time series can be used as a weighting factor to normalize the model residuals during calibration so that the assumptions of least squares optimization are fulfilled. Calibration and uncertainty estimation are demonstrated with an example application of a distributed Hydrological Bureau Waterbalance (HBV) model of three watersheds in the Neckar basin in southwest Germany. The model residual distributions are presented and compared to a standard calibration method. Further, it is shown that the new methodology leads to more realistic confidence intervals for model simulations. Although applied to the HBV model as an example, the method is general and can be applied to any model and also in conjunction with other uncertainty estimation techniques.