Permafrost adds complexity to hydrostratigraphic characterization. Host geology, temperature, water content, and salinity all control its hydrogeological properties, resulting in strong spatial heterogeneity. Permafrost thickness, depth, and lateral continuity are also poorly constrained at regional scales. At local scales, detailed monitoring and coupled heat–groundwater models can represent permafrost dynamically, including advective heat transport. At regional and national scales, however, these processes are not numerically tractable, requiring simplified representations. To support the representation of permafrost in national-scale hydrological models of Canada, where more than 40% of the landmass is underlain by permafrost, we developed a nested model of the Caracajou Watershed (Northwest Territories) within the Canada1Water integrated modelling framework. The Caracajou Watershed covers approximately 10,000 km² and spans a transition from discontinuous to continuous permafrost. A surface water gauging station has operated at the watershed outlet since 2006, providing a basis for model evaluation. The model was built using Canada1Water data layers, supplemented with localized geological and permafrost information, and discretized with nodal spacing ranging from 20 m to 3 km. Model scenarios were designed to test sensitivity to active-layer thickness, talik depth, and permafrost extent. Simulated discharge at the watershed outlet was used to evaluate the cumulative hydrologic response. Permafrost representation influences peak flows, and summer low flows. However, the spread of the ensemble is lower than the mean error between modelled and observed results. These results underscore both the hydrologic importance of permafrost and the limitations imposed by data sparsity and scale in its representation in large-domain models.