This paper presents a novel strain-dependent water retention model for improved predictive modelling of localized gas flow in bentonite. The proposed model uses fundamental material properties such as dry density and montmorillonite content to generate improved predictions of water retention under different strain conditions. The model was validated with the use of laboratory measurements of capillary pressure in MX-80 bentonite at different dry densities. An additional phenomenological test simulated microfracture induced gas flow in FEBEX bentonite, which showed strong local desaturation due to developing microfractures and a resulting decreasing gas entry pressure. The application of the approach provided first good results that can be relevant for modelling radioactive waste repositories.