Abstract A progressive perceptual understanding approach was used to identify a model structure able to represent the non‐linear behaviour of the hydrological cycle in a small intermittent Mediterranean stream. The initial lumped model structure consisting of a series of four connected water tanks (LU3) progressed to a model with five tanks (LU4), and finally to a semidistributed model structure (SD4) in which spatial variability of the evapotranspiration according to the vegetation cover and to the local aspect was considered. In the final model structure, which gave the best fit (Nash–Sutcliffe efficiency index = 0·78), an additional tank representing the riparian zone was included (SD4‐R). Results showed that the abrupt changes of the riparian water table during summer and the formation of a perched water table during the transition from dry to wet conditions were the main mechanisms leading to the non‐linear hydrological behaviour. The transpiration process from the saturated zone and the spatial variability of evapotranspiration resulted in key factors successfully representing the annual water balance. The spatial and temporal validations carried out for each of the four model structures considered in this study supported the hypothesis adopted during the calibration process. Copyright © 2008 John Wiley & Sons, Ltd.