Large‐scale hydrological models are nowadays mostly calibrated using observed discharge. As a result, a large part of the hydrological system, in particular the unsaturated zone, remains uncalibrated. Soil moisture observations from satellites have the potential to fill this gap. Here we evaluate the added value of remotely sensed soil moisture in calibration of large‐scale hydrological models by addressing two research questions: (1) Which parameters of hydrological models can be identified by calibration with remotely sensed soil moisture? (2) Does calibration with remotely sensed soil moisture lead to an improved calibration of hydrological models compared to calibration based only on discharge observations, such that this leads to improved simulations of soil moisture content and discharge? A dual state and parameter Ensemble Kalman Filter is used to calibrate the hydrological model LISFLOOD for the Upper Danube. Calibration is done using discharge and remotely sensed soil moisture acquired by AMSR‐E, SMOS, and ASCAT. Calibration with discharge data improves the estimation of groundwater and routing parameters. Calibration with only remotely sensed soil moisture results in an accurate identification of parameters related to land‐surface processes. For the Upper Danube upstream area up to 40,000 km2, calibration on both discharge and soil moisture results in a reduction by 10–30% in the RMSE for discharge simulations, compared to calibration on discharge alone. The conclusion is that remotely sensed soil moisture holds potential for calibration of hydrological models, leading to a better simulation of soil moisture content throughout the catchment and a better simulation of discharge in upstream areas. Key Points Satellite soil moisture holds potential for calibration of hydrological models Soil moisture observations enable better calibration of land‐surface parameters Errors in discharge simulations are reduced using soil moisture for calibration