The Gravity Recovery and Climate Experiment (GRACE) mission and its Follow-On (GRACE-FO) mission provide unprecedented observations of terrestrial water storage (TWS) dynamics at basin to continental scales. Established GRACE data assimilation techniques directly adjust the simulated water storage components to improve the estimation of groundwater, streamflow, and snow water equivalent. Such techniques artificially add/subtract water to/from prognostic variables, thus upsetting the simulated water balance. To overcome this limitation, we propose and test an alternative assimilation scheme in which precipitation fluxes are adjusted to achieve the desired changes in simulated TWS. Using a synthetic data assimilation experiment, we show that the scheme improves performance skill in precipitation estimates in general, but that it is more robust for snowfall than for rainfall, and it fails in certain regions with strong horizontal gradients in precipitation. The results demonstrate that assimilation of TWS observations can help correct (adjust) the model’s precipitation forcing and, in turn, enhance model estimates of TWS, snow mass, soil moisture, runoff, and evaporation. A key limitation of the approach is the assumption that all errors in TWS originate from errors in precipitation. Nevertheless, the proposed approach produces more consistent improvements in simulated runoff than the established GRACE data assimilation techniques.