Abstract. The impacts of representing cloud microphysical processes in a stochastic subcolumn framework are investigated, with emphasis on estimating the aerosol indirect effect. It is shown that subgrid treatment of cloud activation and autoconversion of cloud water to rain reduce the impact of anthropogenic aerosols on cloud properties and thus reduce the global mean aerosol indirect effect by 19%, from −1.59 to −1.28 W m⁻². This difference is partly related to differences in the model basic state; in particular, the liquid water path (LWP) is smaller and the shortwave cloud radiative forcing weaker when autoconversion is computed separately for each subcolumn. However, when the model is retuned so that the differences in the basic state LWP and radiation balance are largely eliminated, the global-mean aerosol indirect effect is still 14% smaller (i.e. −1.37 W m⁻²) than for the model version without subgrid treatment of cloud activation and autoconversion. The results show the importance of considering subgrid variability in the treatment of autoconversion. Representation of several processes in a self-consistent subgrid framework is emphasized. This paper provides evidence that omitting subgrid variability in cloud microphysics contributes to the apparently chronic overestimation of the aerosol indirect effect by climate models, as compared to satellite-based estimates.