Mars exhibits less atmospheric variability at the solstices than it does during periods nearer the equinoxes. Much of this variability in air temperature and dust activity is attributable to a significant decrease in eastward traveling transient wave amplitudes in the lower atmosphere near the solstice. Previous versions of the Mars Weather Research and Forecasting (MarsWRF) model using only dust radiative forcing have reproduced the nature but not the magnitude of this ‘solsticial pause’ in atmospheric variability. In this paper, we use a version of MarsWRF that includes a fully-interactive dust and water cycle to simulate winter solsticial pauses under a range of dust and water ice conditions. The upgraded model specifically includes a new hybrid binned/two–moment microphysics model that simulates dust, water ice, and cloud condensation nuclei. The scheme tracks mass and number density for the three particle types throughout the atmosphere and allows advection by resolved winds, mixing by unresolved processes, and sedimentation that depends on particle size and density. Ice and dust particles interact with radiation in the atmosphere using a Mie scattering parameterization that allows for variable particle size and composition. Heterogeneous nucleation and condensation use an adaptive bin size scheme to accurately track the particle size during condensation and sublimation processes. All microphysical processes in the model are calculated within the dynamical timesteps using stability-guaranteed implicit calculations with no sub–timestepping. The impact of the addition of water processes to the model was assessed by comparing simulations with only interactive dust (dry simulations) and ones with a fully-interactive dust and water cycle (wet simulations). In dry simulations with dust storms a solsticial pause occurs in the northern winter with a magnitude (or ‘depth’) that depends on the opacity of the southern summer dust storms. In wet simulations that include water ice and dust particles, deep solsticial pauses are found in both winter hemispheres. In all simulations that reproduce the solsticial pause, energy and instability analysis suggest that a decrease in baroclinic instability and increase in barotropic energy conversion occurs during the solsticial pause. In dry simulations the decrease in baroclinic instability is caused by increased dust opacity leading to increased thermal static stability. In wet simulations, additional opacity from local cap–edge ice clouds reduces the near surface wind shear and further inhibits baroclinic eddy growth. The wet simulations are in better agreement with observations and tend to support results from other models that include ice cloud radiative effects.