Riparian trees can regulate streamflow dynamics and water budgets by taking up large amounts of water from both soil and groundwater compartments. However, their role has not been fully recognized in the hydrologic literature and the catchment modeling community. In this study, we explored the influence of riparian evapotranspiration (ET) on streamflow by simulating daily stream water exports from three nested Mediterranean catchments, both including and excluding the riparian compartment in the structure of the PERSiST (Precipitation, Evapotranspiration and Runoff Simulator for Solute Transport) rainfall–runoff model. The model goodness of fit for the calibration period (September 2010–August 2012) significantly improved with the inclusion of the riparian compartment, especially during the vegetative period, when according to our simulations, the riparian zone significantly reduced the overestimation of mean daily streamflow (from 53% to 27 %). At the catchment scale, simulated riparian ET accounted for 5.5% to 8.4% of annual water depletions over a 20-year reference period (1981–2000), and its contribution was especially noticeable during summer (from 8%to 26 %). Simulations considering climate change scenarios suggest large increases in riparian ET during the dormant period (from 19% to 46 %) but only small increases (from 1% to 2 %) in its contribution to annual water budgets. Overall, our results highlight that a good assessment of riparian ET is essential for understanding catchment hydrology and streamflow dynamics in Mediterranean regions. Thus, the inclusion of the riparian compartment in hydrological models is strongly recommended in order to establish proper management strategies in water-limited regions.