Hydraulic nonequilibrium in soil during water infiltration and drainage is a well-known phenomenon. During infiltration, water initially invades easily accessible pores before it slowly redistributes towards some state of energetic minimum. In analogy, during drainage, easily drainable pores are emptied more rapidly than those blocked by bottlenecks. The consequence is that the water content is lagging behind the water potential and both state variables do not follow a unique water retention curve as typically assumed when applying Richards equation. Current models that account for nonequilibrium allow for the required decoupling of water content and water potential; however, they do not consider the consequences for the hydraulic conductivity. In this contribution, we present a physically based approach to estimate hydraulic conductivity during nonequilibrium, which depends on both water content and water potential during nonequilibrium conditions. This approach of a dynamic hydraulic conductivity function is demonstrated for an infiltration process into relatively dry soil and for a stepwise drainage and rewetting with decreasing and increasing water fluxes (i.e., multistep flux experiment). The new approach reproduces well-known phenomena such as pressure overshoot and preferential flow across infiltration fronts using a unified concept for hydraulic conductivity. This was not possible with existing models assuming some fixed unsaturated conductivity function depending on either water content or water potential.