Soil Moisture and Ocean Salinity (SMOS) level 2 soil moisture observations were validated by the soil moisture simulations of the Watershed Simulation and Forecasting System (WSFS) in the Aurajoki watershed located in Southwest Finland. The validation period included summer seasons 2010–2012. A new 2-layer soil moisture model was developed to simulate soil moisture in two layers, 10 cm thick surface layer and 80 cm thick sub-surface layer, due to low penetration depth of the satellite observations. Both layers of the model were divided into six classes of soil types to characterize the soil properties of the study catchment. The soil parameters for different soil types were estimated using the soil moisture observation network and other model parameters were calibrated against discharge observations. The WSFS with the 2-layer soil moisture model was found appropriate in reproducing observed discharges in the test site. Despite slight dry bias, the SMOS observations were consistent with the simulated surface soil moisture content, giving Nash–Sutcliffe efficiency coefficient of 0.77 and root-mean-square deviation of 0.076. The analysis of the SMOS level 2 data presents promising results for the satellite observations to be used as an indicator of the filling of the soil moisture storage in the WSFS.