Accurate soil moisture information is critically important for hydrological modelling and natural hazards (landslide & debris flow). However, its effective utilisation in those areas is still in a state of infancy. This paper focuses on exploring the advances and potential issues in current application of satellite soil moisture observations in hydrological modelling. It has proposed that hydrological application of soil moisture data requires two inter-connected components: 1) soil moisture data relevant to hydrology, and 2) appropriate hydrological model structure compatible with such data. In order to meet these two requirements, the following three research tasks are suggested: the first is to carry out comprehensive evaluations of satellite soil moisture observations for hydrological modelling; the second is that the soil moisture representations in hydrological models may need to be modified so that they are more compatible with the real field soil moisture variations; and the third is that a soil moisture product (i.e., soil moisture deficit) directly applicable to hydrological modelling should be developed.