The objective of this study is to incorporate a time-dependent Soil Moisture Accounting (SMA) based Curve Number method (SMA_CN) in Soil and Water Assessment Tool (SWAT) and compare its performance with the existing CN method in SWAT by simulating the hydrology of two agricultural watersheds in Indiana, USA. Results show that fusion of the SMA_CN method causes decrease in runoff volume and increase in profile soil moisture content, associated with larger groundwater contribution to the streamflow. In addition, the higher amount of moisture in the soil profile slightly elevates the actual evapotranspiration. The SMA-based SWAT configuration consistently produces improved goodness-of-fit scores and less uncertain outputs with respect to streamflow during both calibration and validation. The SMA_CN method exhibits a better match with the observed data for all flow regimes, thereby addressing issues related to peak and low flow predictions by SWAT in many past studies. Comparison of the calibrated model outputs with field-scale soil moisture observations reveals that the SMA overhauling enables SWAT to represent soil moisture condition more accurately, with better response to the incident rainfall dynamics. While the results from the modification of the CN method in SWAT are promising, more studies including watersheds with various physical and climatic settings are needed to validate the proposed approach. Copyright © 2015 John Wiley & Sons, Ltd.