It is well known that forests have important effects on mitigating flood and drought, and decrease risks of slope failure and surface erosion. This study evaluated how hydraulic properties of forest soils affect such functions of forests. Firstly, we clarified changes in soil hydraulic properties resulting from structure development. For this purpose, we assumed undisturbed forest soils as the structure‐developed soils, and soils prepared by crashing secondary soil structure as structure‐undeveloped soils. Hydraulic properties of these soils were compared. As a result, the structural development increased effective porosity and saturated hydraulic conductivity. The amount of the increase was large near the soil surface. Therefore, we can say that the soils in the shallower layer were affected more by the structure development, having larger water holding capacity and permeability than the structure‐undeveloped soils. By using the observed hydraulic properties, numerical simulations were conducted for modeling hydrological processes in a forested hillslope. Results showed that the structure‐developed soils supplied rainwater into the bedrock with milder intensity and stabilized baseflow discharge. This was because the structure‐developed soils hold more rainwater than the structure‐undeveloped soils due to the high water holding capacity. On the contrary, the structure‐developed soils produced greater and rapider saturated through flow than the structure‐undeveloped soils, because of the high permeability. This resulted in increase storm runoff for the structure‐developed soils. For the structure‐undeveloped soils, delayed and dull peaks of storm runoff were resulted to form expanded saturation area in the hillslope. That is, structure‐undeveloped soils produced larger soil pore pressures than the structure‐developed soils. Consequently, the hillslope with structure‐developed soils was less vulnerable to slope failure and surface soil erosion.