A three-dimensional numerical model of turbulence in an atmospheric boundary layer has been revised to utilize subgrid transport equations for the subgrid Reynolds stresses and fluxes rather than subgrid eddy coefficients. It was applied to a daytime boundary layer over heated ground in a region of horizontal area 8km square and 2km deep, utilizing 40×40×40 grid points. The constraints involved in selecting four important subgrid closure constants are discussed in some detail, along with maintenance of realizability on the subgrid scale. The results indicate that the subgrid transport equations produce subgrid Reynolds stresses and fluxes which realistically simulate the transfer of larger scale variance to subgrid scales, provided truncation errors due to advective terms are not too large. They also show the superiority of this method over the use of (nonstability dependent) nonlinear eddy coefficients in maintaining the sharpness of the inversion base which lies above the mixed layer.