Parlange and Brutsaert (1987) derived a modified Boussinesq equation to account for the capillary effect on water table dynamics in unconfined aquifers. Barry et al. (1996) solved this equation subject to a periodic boundary condition. Their solution shows significant influence of capillarity on water table fluctuations, which evolve to finite-amplitude standing waves at the high frequency limit. Here we propose a new governing equation for the water table, which considers both horizontal and vertical flows in an unsaturated zone of finite thickness. An approximate analytical solution for periodic water table fluctuations based on the new equation was derived. In agreement with previous results, the analytical solution shows that the unsaturated zone's storage capacity permits water table fluctuations to propagate more readily than predicted by the Boussinesq equation. Furthermore, the new solution reveals a capping effect of the unsaturated zone on both the amplitude and phase of the water table fluctuations as well as the water table overheight. Due to the finite thickness of the unsaturated zone, the capillary effect on water table fluctuations is modified mainly with reduced amplitude damping and phase shift. ©2013. American Geophysical Union. All Rights Reserved.