In this study, the internal circulation structures of the 14 July 1987 intense mesoscale convective system (MCS) are investigated using an improved high‐resolution version of the Canadian regional finite‐element model. It is found that although the MCS is characterized by a leading convective line followed by a trailing stratiform rainband, the associated circulation structures differ substantially from those in the classical midlatitude squall system. These include the rapid propagation and separation of the leading convection from the trailing rainband, the development of a surface‐based instead of an elevated rear‐to‐front descending flow and a shallow front‐to‐rear ascending flow associated with the stratiform precipitation, the generation of low‐ and mid‐level rather than mid‐ to upper‐level stratiform cloudiness and the development of a strong anticyclonic vorticity band at the back edge of the stratiform region. It is shown that the trailing stratiform rainband is dynamically forced by frontogenetical processes, and aided by the release of conditional symmetric instability and local orographical lifting. The intense leading and trailing circulations result from latent heat released by the convective and explicit cloud schemes, respectively. Sensitivity experiments reveal that the proper coupling of these two cloud schemes is instrumental in obtaining a realistic prediction of the above‐mentioned various mesoscale components. Vorticity budget calculations show that tilting of horizontal vorticity contributes the most to the amplification of the anticyclonic vorticity band, particularly during the squall's incipient stage. The sensitivity of the simulated squall system to other model physical parameters is also examined.