Fuel moisture content (FMC) is a critical parameter in fire and plume behaviors, showing diurnal and spatial variations influenced by local meteorological conditions, soil characteristics, and fuel properties. In low-intensity fires, small-scale FMC variations intensify, leading to an amplification of their effects on fire physics. In an effort to capture these variations, we developed a physics-based model that couples a thermodynamic-based FMC prediction model for dead fuels with the Fire Dynamics Simulator of the National Institute of Standards and Technology. The model accuracy is validated against several existing experimental datasets, showing improvements over the baseline model, which uses the kinetic-based Arrhenius drying approach. A case study of flame propagation in a small fuel bed is also presented, indicating the improved performance of the new model and its novel capabilities in capturing complex processes of fuel drying and moisture flux exchanges between the fuel and ambient atmosphere.