An emerging approach to downscaling the projections from General Circulation Models (GCMs) to scales relevant for basin hydrology is to use output of GCMs to force higher-resolution Regional Climate Models (RCMs). With spatial resolution often in the tens of kilometers, however, even RCM output will likely fail to resolve local topography that may be climatically significant in high-relief basins. Here we develop and apply an approach for downscaling RCM output using local topographic lapse rates (empirically-estimated spatially and seasonally variable changes in climate variables with elevation). We calculate monthly local topographic lapse rates from the 800-m Parameter-elevation Regressions on Independent Slopes Model (PRISM) dataset, which is based on regressions of observed climate against topographic variables. We then use these lapse rates to elevationally correct two sources of regional climate-model output: (1) the North American Regional Reanalysis (NARR), a retrospective dataset produced from a regional forecasting model constrained by observations, and (2) a range of baseline climate scenarios from the North American Regional Climate Change Assessment Program (NARCCAP), which is produced by a series of RCMs driven by GCMs. By running a calibrated and validated hydrologic model, the Soil and Water Assessment Tool (SWAT), using observed station data and elevationally-adjusted NARR and NARCCAP output, we are able to estimate the sensitivity of hydrologic modeling to the source of the input climate data. Topographic correction of regional climate-model data is a promising method for modeling the hydrology of mountainous basins for which no weather station datasets are available or for simulating hydrology under past or future climates.