The humidity of the mid troposphere has a significant effect on the development of deep convection. Dry layers (dry intrusions) can inhibit deep convection through the effect of a thermal inversion resulting from radiation and due to the reduction in buoyancy resulting from entrainment. Recent observations have shown that the sensitivity of cloud top height to changes in mid-tropospheric humidity can be larger than straightforward “parcel dilution” would lead us to expect. Here, we investigate how aerosol effects on cloud development and microphysics are coupled to the effects of mid-tropospheric dry air. The two effects are coupled because the buoyancy loss through entrainment depends on droplet evaporation, so is controlled both by the environmental humidity and by droplet sizes, which are, in turn, controlled in part by the aerosol size distribution. Previous studies have not taken these microphysical effects into account. Cloud development and microphysics are examined using a 2-D non-hydrostatic cloud model with a detailed treatment of aerosol, drop, and ice-phase hydrometeor size spectra. A moderately deep mixed-phase convective cloud that developed over the High Plains of the United States is simulated. We find that a dry layer in the mid troposphere leads to a reduction in cloud updraft strength, droplet number, liquid water content and ice mass above the layer. The effect of the dry layer on these cloud properties is greatly enhanced under elevated aerosol conditions. In an environment with doubled aerosol number (but still realistic for continental conditions) the dry layer has about a three-times larger effect on cloud drop number and 50% greater effect on ice mass compared to an environment with lower aerosol. In the case with high aerosol loading, the dry layer stops convective development for over 10 min, and the maximum cloud top height reached is lower. However, the effect of the dry layer on cloud vertical development is significantly reduced when aerosol concentrations are lower. The coupled effect of mid-tropospheric dry air and aerosol on convective development is an additional way in which long term changes in aerosol may impact planetary cloud processes and climate.