Abstract Future oil palm expansion could substantially alter tropical carbon and water cycles, but its regional impacts remain unclear. Using CLM5‐palm, we simulate large‐scale oil palm expansion from 2023 to 2100 in Southeast Asia, Africa and the Amazon. Expansion increases total vegetation carbon by 9.7%, decreases soil carbon by 5.9% and raises net ecosystem production more than fivefold, reflecting oil palm’s high productivity. Vegetation carbon responses depend strongly on previous land use, with forest‐to‐oil palm conversion causing the largest losses and cropland conversions yielding modest gains. Hydrologically, expansion enhances evapotranspiration (+2.5%), reducing surface water availability (−3.3%), runoff (−3.3%) and soil moisture (−3.7%). Land‐surface temperature responses reflect opposing biogeophysical (−0.54°C) and biogeochemical (+0.18°C) effects, with regional contrasts: cooling in Africa (−0.37°C), warming in the Amazon (+0.23°C), and near offsets in Southeast Asia. These results highlight strong regional differences and climate‐dependent trade‐offs, with important implications for sustainable land‐use planning under continued warming.