Passive optical retrievals of cloud liquid water path (LWP), like those implemented for Moderate Resolution Imaging Spectroradiometer (MODIS), rely on cloud vertical profile assumptions to relate optical thickness (τ) and effective radius (re) retrievals to LWP. These techniques typically assume that shallow clouds are vertically homogeneous; however, an adiabatic cloud model is plausibly more realistic for shallow marine boundary layer cloud regimes. In this study a satellite retrieval simulator is used to perform MODIS-like satellite retrievals, which in turn are compared directly to the large-eddy simulation (LES) output. This satellite simulator creates a framework for rigorous quantification of the impact that vertical profile features have on LWP retrievals, and it accomplishes this while also avoiding sources of bias present in previous observational studies. The cloud vertical profiles from the LES are often more complex than either of the two standard assumptions, and the favored assumption was found to be sensitive to cloud regime (cumuliform/stratiform). Confirming previous studies, drizzle and cloud top entrainment of dry air are identified as physical features that bias LWP retrievals away from adiabatic and toward homogeneous assumptions. The mean bias induced by drizzle-influenced profiles was shown to be on the order of 5–10 g/m2. In contrast, the influence of cloud top entrainment was found to be smaller by about a factor of 2. A theoretical framework is developed to explain variability in LWP retrievals by introducing modifications to the adiabatic re profile. In addition to analyzing bispectral retrievals, we also compare results with the vertical profile sensitivity of passive polarimetric retrieval techniques.