The representation of clouds over the Southern Ocean in contemporary climate models remains a major challenge. A major dynamical influence on the structure of clouds is the passage of extratropical cyclones. They exert significant dynamical influences on the clouds in the dynamically active frontal regions as well as in the dynamically suppressed regions ahead and behind the cyclones. A cyclone compositing methodology is applied to a reanalysis and vertical profiles of cloudiness from CloudSat/CALIPSO to quantify the relationship between clouds and dynamics in extratropical cyclones over the Southern Ocean. It is found that the range of cloud fraction, vertical motion, and relative humidity changes considerably with height. There is a strong quasi-linear relationship between the three variables which changes with altitude. After establishing the observed relationships, the methodology is applied to the Australian Community Climate and Earth System Simulator to evaluate the model’s ability to simulate the identified cloud-dynamics relationships. While the model is able to qualitatively reproduce the overall cloud structure, the circulation around the cyclone is generally too weak. As a result, the model fails to represent the observed cloud to dynamics relationship. This wrong relationship in the model leads to a misrepresentation of the cloud field manifested as either an error in the cloud fraction or as simulating the “right” clouds for the “wrong” reason. The result underscores the importance of relationship-oriented model evaluation techniques over simple right or wrong assessments.