The Weather Research and Forecasting (WRF) model was tested through 18 different combinations of physics parameters to simulate the regional climate over the Mackenzie River Basin (MRB). The objective was to investigate the response to the physics parameters for dynamic downscaling of climatic variables. The rainfall, temperature, albedo, and surface pressure from the 18 different WRF setups were compared with the reference data and were found sensitive to land surface physics and microphysics and to the radiation physics. The combination of Noah Land Surface Physics with the WRF Single-moment 6-class microphysics and CAM shortwave and longwave schemes produced comparable results for summer 2009. This WRF setup was further tested for summers 1979–1991 and it was found that WRF could simulate air temperature more accurately than the rainfall, since the rainfall over the mountainous regions was over-simulated. Then the selected combinations of WRF parameterizations were used to downscale the CanESM2 historical temperature and rainfall for summers 1979–2005, which showed good agreement with the reference data. The suggested WRF parameters from this study could be utilized for regional climate modeling of MRB.