A new approach by Bachmann et al. describes the wetting behavior of soil with reduced wettability with a macroscopic dynamic contact angle concept. The contact angle (CA) is hysteretic and depends on both time and water content. A maximum CA is reached at the permanent wilting point and decreases during rewetting until achieving the minimum CA at a water content close to field capacity. To simulate water flow in a soil with dynamic wettability, we expand the van Genuchten parameterization of hydraulic properties to include the macroscopic CA. Both pore and pore-surface properties can vary in space. We tested the new parameterization approach by simulating one drying–rewetting cycle in a forest soil profile. Our drying–rewetting cycle is a simplified scenario for a seasonal climate where a prolonged dry period is followed by a wet period. We could qualitatively reproduce many observations of water dynamics typically attributed to water-repellent soils. The infiltration of water into hydrophobic soil created a distribution, fingering, and redistribution zone. With rewetting, the fingers slowly widened and finally dissipated. We further analyzed the sensitivity of the simulated water flow processes to the different wettability parameters. Fingers form where the average maximum CA is large (≥90°) but not in case of subcritical water repellency (average maximum CA <90°). The magnitude of the critical water content and the degree of pore heterogeneity also influence the initiation and stability of fingers. The infiltration into the root zone and the drainage out of the soil profile are highly sensitive to the degree and persistence of water repellency.