Using the observed data at Dunhuang Gobi site in Northwest China, the optimum values of surface albedo, roughness length and soil thermal properties for the arid region required by the Common Land Model (CoLM) are obtained. In order to understand land－atmosphere interaction and the sensitivity of simulation outputs to different settings of the important parameters, two control tests and three sensitive tests with different combinations of the three parameters are carried out by using the forcing data collected at the same Dunhuang Gobi site from May 2000 to July 2004. The results from the control tests indicate that the CoLM with the optimum values of the parameters, here called Optimized CoLM, can simulate the land surface processes reasonably. By comparison with the observed data, it is shown that the simulations from Optimized CoLM are much more precise than those from the original CoLM, which uses default values of the parameters. The results from the sensitive tests demonstrate that: (1) Surface albedo has great influence on the ground surface temperature (TGS) all year round, especially in spring and summer; (2) the roughness length and the soil thermal properties can also affect the TGS in spring－summer and autumn－winter, respectively; (3) as to the sensible heat flux (SHF), it is more sensitive to the surface albedo and the roughness length in the summer half-year than in the winter half-year, and less sensitive to the soil thermal properties; (4) when computing the TGS, the net radiation and the SHF in the original CoLM, it is found that there exist error counteractions, which will conceal the simulation error. The reason for the phenomenon is that each default parameter will add some positive or negative errors to the simulation results, but these errors will be offset reciprocally, which make the total simulation error mitigate eventually. Analyses of the surface heat balance show that: The SHF is the major component and the latent heat flux is so small that it can be omitted; the daily-mean SHF is upward from the ground surface to atmosphere all year round, especially in summer. The big portion of net radiation returns to atmosphere in the form of SHF and the rest becomes the ground heat flux and is stored in the soil in summer, which will be released to atmosphere again in the form of SHF in winter. The soil as a heat reservoir is a heat sink in summer and a heat source in winter.