The structure of soil is critical for the ecosystem services it provides since it regulates many key soil processes, including water, air and solute movement, root growth and the activity of soil biota. Soil structure is dynamic, driven by external factors such as land management and climate and mediated by a wide range of biological agents and physical processes operating at strongly contrasting time‐scales, from seconds (e.g., tillage) to many decades (e.g., faunal activity and soil aggregation). In this respect, positive feedbacks in the soil–plant system may lead in the longer term to soil physical degradation or to the recovery of structurally poor soils. As far as we are aware, no existing soil‐crop model can account for such processes. In this paper, we describe a new soil‐crop model (USSF, Uppsala model of Soil Structure and Function) that accounts for the effects of soil structure dynamics on water and organic matter cycling at the soil profile scale. Soil structure dynamics are expressed as time‐varying physical (bulk density, porosity) and hydraulic properties (water retention, hydraulic conductivity) responding to the activity of biological agents (i.e., earthworms, plant roots) and physical processes (i.e., tillage, soil swell‐shrink) at seasonal to decadal time‐scales. In this first application of the model, we present the results of 30‐year scenario simulations that illustrate the potential role and importance of soil structure dynamics for the soil water balance, carbon storage in soil, root growth, and winter wheat yields on two soils (loam and clay) in the climate of central Sweden. A sensitivity analysis was also performed for these two scenarios using the Morris method of elementary effects, which revealed that the most sensitive parameters controlling soil structure dynamics in the USSF model are those determining aggregation induced by organic matter turnover and swell/shrink. We suggest that the USSF model is a promising new tool to investigate a wide range of processes and phenomena triggered by land use and climate change. Results from this study show that feedback in the soil‐crop system mediated by the dynamics of soil physical and hydraulic properties are potentially of central importance for long‐term predictions of soil water balance, crop production, and carbon sequestration under global change.