High frequency of ultra-low cloud droplet number concentrations (ULNc), defined as Nc less than 10 cm⁻³ in this study, is an outstanding problem in Earth system models (ESMs), including E3SM. Aerosol indirect forcing is sensitive to Nc, thus a Nc lower-bound varying from 5 to 40 cm^-3 has been applied in ESMs to reduce the overly strong aerosol indirect forcing. We identified several parameterization problems contributing to ULNc in E3SM. First, changes in cloud fraction were used as a criterion for aerosol activation and cloud droplet evaporation, leading to Nc changes inconsistent with changes in cloud droplet mass (Qc) in the Cloud Layers Unified By Binormals (CLUBB) scheme. Second, the current E3SM doesn’t consider aerosol secondary activation. The third one is inconsistent treatment of turbulence diffusion of Nc and Qc. We proposed a holistic physical solution addressing these three issues. Additionally, we found unrealistic high supersaturation occasionally predicted by the aerosol activation parameterization and addressed this problem by utilizing the predicted supersaturation from CLUBB. The physical solution leads to a good agreement between the simulated and observed ULNc frequencies in the Southern Great Plain and Southern Ocean regions. Cloud and aerosol climatology were minimally affected, with short-wave cloud forcing magnitude increased by less than 1 W m⁻² and aerosol mass burdens generally decreased by 10%. The insights from the physical solution can be applied to other ESMs to address the ULNc problem.