To date, the treatment of permafrost in global climate models has been simplified due to the prevailing uncertainties in the processes involving frozen ground. In this study, we improved the modeling of permafrost processes in a state-of-the-art climate model by taking into account some of the relevant physical properties of soil such as changes in the thermophysical properties due to soil freezing. As a result, the improved version of the global land surface model was able to reproduce a more realistic permafrost distribution at the southern limit of the permafrost area by increasing the freezing of soil moisture in winter. The improved modeling of permafrost processes also had a significant effect on future projections. Using the conventional formulation, the predicted cumulative reduction of the permafrost area by year 2100 was approximately 60% (40–80% range of uncertainty from a multi-model ensemble) in the RCP8.5 scenario, while with the improved formulation, the reduction was approximately 35% (20–50%). Our results indicate that the improved treatment of permafrost processes in global climate models is important to ensuring more reliable future projections.