Clouds and aerosols increase the fraction of global solar irradiance that is diffuse light. This phenomenon is known to increase the photosynthetic light use efficiency (LUE) of closed-canopy vegetation by redistributing photosynthetic photon flux density (400–700 nm) from saturated, sunlit leaves at the top of the canopy, to shaded leaves deeper in the canopy. We combined a process-based carbon cycle model with 10 years of eddy covariance carbon flux measurements and other ancillary data sets to assess 1) how this LUE enhancement influences interannual variation in carbon uptake, and 2) how errors in modeling diffuse fraction affect predictions of carbon uptake. Modeled annual gross primary productivity (GPP) increased by ≈0.94% when observed levels of diffuse fraction were increased by 0.01 (holding total irradiance constant). The sensitivity of GPP to increases in diffuse fraction was highest when the diffuse fraction was low to begin with, and lowest when the diffuse fraction was already high. Diffuse fraction also explained significantly more of the interannual variability of modeled net ecosystem exchange (NEE), than did total irradiance. Two tested radiation partitioning models yielded over- and underestimates of diffuse fraction at our site, which propagated to over- and underestimates of annual NEE, respectively. Our findings highlight the importance of incorporating LUE enhancement under diffuse light into models of global primary production, and improving models of diffuse fraction.