Calibration of watershed models to the shape of the base flow recession curve is a way to capture the important relationship between groundwater discharge and subsurface water storage in a catchment. In some montane Mediterranean regions, such as the midelevation Providence Creek catchment in the southern Sierra Nevada of California (USA), nearly all base flow recession occurs after snowmelt, and during this time evapotranspiration (ET) usually exceeds base flow. We assess the accuracy to which watershed models can be calibrated to ET‐dominated base flow recession in Providence Creek, both in terms of fitting a discharge time‐series and realistically capturing the observed discharge‐storage relationship for the catchment. Model parameters estimated from calibrations to ET‐dominated recession are compared to parameters estimated from reference calibrations to base flow recession with ET‐effects removed (“potential recession”). We employ the Penn State Integrated Hydrologic Model (PIHM) for simulations of base flow and ET, and methods that are otherwise general in nature. In models calibrated to ET‐dominated recession, simulation errors in ET and the targeted relationship for recession (−dQ/dt versus Q) contribute substantially (up to 57% and 46%, respectively) to overestimates in the discharge‐storage differential, defined as d(lnQ)/dS, relative to that derived from water flux observations. These errors result in overestimates of deep‐subsurface hydraulic conductivity in models calibrated to ET‐dominated recession, by up to an order of magnitude, relative to reference calibrations to potential recession. These results illustrate a potential opportunity for improving model representation of discharge‐storage dynamics by calibrating to the shape of base flow recession after removing the complicating effects of ET.