In this study, we analyze the realism with which tropical cyclones (TCs) are simulated in the fully coupled low‐ and high‐resolution Energy Exascale Earth System Model (E3SM) version 1, with a focus on the latter. Compared to the low‐resolution (grid spacing of ∼1°), the representation of TCs improves considerably in the high‐resolution configuration (grid spacing of ∼0.25°). Significant improvements are found in the global TC frequency, TC lifetime maximum intensities, and the relative distribution of TCs among the different basins. However, at both resolutions, spurious TC activity is found in some basins, notably in the subtropical regions. Contrasting the simulated large‐scale TC environment with observations reveals that the model environment is unrealistically conducive for TC development in those regions. Further analysis indicates that these biases are likely related to those in thermodynamic potential intensity, caused by systematic SST biases, and vertical wind shear in the coupled model. TC‐ocean interaction is also examined in the high‐resolution configuration of the model. The salient features of the ocean's response to TC‐induced mixing and the ocean's impact on TC intensification are well‐reproduced. Finally, an evaluation of the influence of El Niño Southern Oscillation (ENSO) on TCs in the high‐resolution configuration of the model reveals that the ENSO‐TC relationship in the model has the right sign and is significant for the North Atlantic and Northwest Pacific, albeit weaker than in observations. In summary, the high‐resolution configuration of the E3SM model simulates TC activity reasonably and hence could be a useful tool for TC‐related research.