This study investigates effects of drizzle and cloud horizontal inhomogeneity on cloud effective radius (re) retrievals from the Moderate Resolution Imaging Spectroradiometer (MODIS). In order to identify the relative importance of various factors, we developed a MODIS cloud property retrieval simulator based on the combination of large-eddy simulations (LES) and radiative transfer computations. The case studies based on synthetic LES cloud fields indicate that at high spatial resolution (∼100 m) 3-D radiative transfer effects, such as illumination and shadowing, can induce significant differences between retrievals ofre based on reflectance at 2.1 μm (re,2.1) and 3.7 μm (re,3.7). It is also found that 3-D effects tend to have stronger impact onre,2.1 than re,3.7, leading to positive difference between the two (Δre,3.7−2.1) from illumination and negative Δre,3.7−2.1from shadowing. The cancellation of opposing 3-D effects leads to overall reasonable agreement betweenre,2.1 and re,3.7 at high spatial resolution as far as domain averages are concerned. At resolutions similar to MODIS, however, re,2.1 is systematically larger than re,3.7when averaged over the LES domain, with the difference exhibiting a threshold-like dependence on bothre,2.1and an index of the sub-pixel variability in reflectance (Hσ), consistent with MODIS observations. In the LES cases studied, drizzle does not strongly impact reretrievals at either wavelength. It is also found that opposing 3-D radiative transfer effects partly cancel each other when cloud reflectance is aggregated from high spatial resolution to MODIS resolution, resulting in a weaker net impact of 3-D radiative effects onre retrievals. The large difference at MODIS resolution between re,3.7 and re,2.1 for highly inhomogeneous pixels with Hσ> 0.4 can be largely attributed to what we refer to as the “plane-parallelrebias,” which is attributable to the impact of sub-pixel level horizontal variability of cloud optical thickness onre retrievals and is greater for re,2.1 than re,3.7. These results suggest that there are substantial uncertainties attributable to 3-D radiative effects and plane-parallelre bias in the MODIS re,2.1retrievals for pixels with strong sub-pixel scale variability, and theHσ index can be used to identify these uncertainties.