Summary Dryland (non-irrigated) crop production in semi-arid regions requires sufficient water storage in the soil profile to ensure adequate plant available water, particularly in areas where the majority of annual precipitation occurs during the non-growing season. Producers can increase soil water storage through the adoption of best management practices (BMPs) for tillage and crop residue management. The objective of this study was to assess our hypothesis that watershed-wide adoption of no-till (NT) farming would decrease winter water losses and increase early growing season plant available water as compared with conventional tillage (CT) methods. We analyzed water storage potential under assumed full-scale adoption of NT and CT cropping practices in the Palouse region of eastern Washington State by applying the Distributed Hydrology Soil Vegetation Model (DHSVM) with modifications to represent the physical changes to infiltration, evaporation, and runoff that result from tillage management. DHSVM yielded a Nash–Sutcliffe model efficiency (NSE) for streamflow of 0.69 for the watershed-scale simulations over the Palouse River basin, which falls within the NSE ranges reported for DHSVM (0.57–0.91). Surface temperature predictions resulted in an NSE of 0.60, and the model was able to predict the soil state (frozen or unfrozen) 81% of the time. Simulated soil moisture was approximately 50% greater under widespread adoption of CT versus NT management during the majority of the winter months. Predicted volumetric soil moisture content for April 1, 2005 was 29% and 34% under CT and NT management, respectively. This difference in winter and spring soil moisture was caused primarily by decreased evaporation under NT, with minimal effects resulting from changes in infiltration. Two simple crop yield estimation methods indicated that increased spring soil moisture under NT management may result in a 21–26% wheat yield increase. We concluded that NT has the potential to increase soil water storage of winter precipitation in the root-zone, which may lead to higher wheat yields in the Palouse region. Furthermore, DHSVM was found to be suitable for investigating some watershed-scale agricultural management opportunities and has the potential to address additional questions pertaining to sustainable farming.