A limited-area stretched-grid method is tested in a regional atmospheric model with physics parameterization to examine its capability to simulate moist physical processes. The stretched-grid model is aimed at achieving high resolution in a small area of interest while covering a large limited-area spatial domain. The simulation of the stretched-grid model over South America shows that it works well when including a full set of physics parameterization and is able to produce comparable results to those in the uniform high-resolution simulation but with improved computational efficiency.