The Tibetan Plateau plays a significant role in the atmospheric circulation and the Asian monsoon system. Turbulent surface fluxes and the evolution of boundary layer clouds to deep and moist convection provide a feedback system that modifies the Plateau’s surface energy balance on scales that are currently unresolved in mesoscale models. This work analyses the land surface’s role and specifically the influence of soil moisture on the triggering of convection at a cross-section of the Nam Co Lake basin, 150 km north of Lhasa using a cloud resolving atmospheric model with a fully coupled surface. The modelled turbulent fluxes and development of convection compare reasonably well with the observed weather. The simulations span Bowen-ratios of 0.5 to 2.5. It is found that convection development is strongest at intermediate soil moistures. Dry cases with soils close to the permanent wilting point are moisture limited in the convection development, while convection in wet soil moisture cases is limited by cloud cover reducing incoming solar radiation and sensible heat fluxes. This has a strong impact on the surface energy balance. This study also shows that local development of convection is an important mechanism for the upward transport of water vapour that originates from the lake basin that can then be transported to dryer regions of the plateau. Both processes demonstrate the importance of soil moisture and surface–atmosphere interactions on the energy and hydrological cycles of the Tibetan Plateau.