Small-scale variations in hydrologic processes that are traditionally viewed as homogeneous have a significant impact on the simulation of hydrologic processes at different scales in the watershed. A Hydrologic Model System (HMS) was used in this study to simulate hydrologic processes at different scales in a small watershed (7.29 km2) within the Susquehanna River Basin in Pennsylvania and the simulated results were used to find ways to better represent these small-scale variations in large-scale climate and hydrology applications. The spatial distributions of various hydrologic properties were included in the simulations along with digital elevation model (DEM), soil data, and land use/land cover data. 5 minutes meteorological records collected from four gauge stations within the watershed were used to drive fifty model runs, which were designed to examine the effects of grid size change and different parameterization schemes on hydrologic responses. Simulated results show that small-scale variations both in space and time in precipitation and saturated hydraulic conductivity have significant impacts on the streamflow hydrograph. The simulation with a 15-minute time step and a 100-meter grid size is the most optimized in terms of required computational time and simulation accuracy. Subsequently, a scale function was developed to transform simulated hydrologic responses at different scales.