The effects of vegetation and its seasonal variation on energy and the hydrological cycle were examined using a state-of-the-art Community Atmosphere Model (CAM3). Three 15-year numerical experiments were completed: the first with realistic vegetation characteristics varying monthly (VEG run), the second without vegetation over land (NOVEG run), and the third with the vegetation characteristics held at their annual mean values (VEGMEAN run). In these models, the hydrological cycle and land surface energy budget were widely affected by vegetation. Global- and annual-mean evapotranspiration significantly increased by 11.8% in the VEG run compared with the NOVEG run, while runoff decreased by 13.2% when the realistic vegetation is incorporated. Vegetation plays different roles in different regions. In tropical Asia, vegetation-induced cooling of the land surface plays a crucial role in decreasing tropical precipitation. In middle latitudes and the Amazon region, however, the vegetation-induced increase of evapotranspiration plays a more important role in increasing precipitation. The seasonal variation of vegetation also shows clear influences on the hydrological cycle and energy budget. In the boreal mid-high latitudes where vegetation shows a strong seasonal cycle, evapotranspiration and precipitation are higher in the summer in the VEG run than in the VEGMEAN run.