Present day understanding of the hydrologic cycle is limited by the fact that little data have been compiled concerning mass movements of water in the atmosphere. As a result, relationships between precipitation, evapotranspiration, and runoff have been obscured. The role of the atmosphere in the hydrologic cycle is discussed, and the relationship of the hydrologic cycle to the air mass cycle is clarified. Taking the Mississippi Watershed as an example, quantitative estimates are prepared of the percentage of precipitation occurring from, and of evapotranspiration occurring into, maritime and continental air masses. These estimates are based upon quantitative studies for selected stations within the watershed. Pilot balloon and radiosonde data are utilized to determine the total flux of moisture in maritime and in continental air into the Mississippi Watershed. From these data a complete balance of the hydrologic cycle for the Mississippi Watershed is prepared. The results of this investigation are then used in analyzing the various phases of the hydrologic cycle. It is shown that only a small percentage of the maritime moisture advected over the continents is ever precipitated; that in spite of this fact most precipitation occurs from maritime air and is derived directly from oceanic sources; and that the modification of the evapotranspiration regime even over a widespread area can have comparatively little direct effect on the average quantity of precipitation recorded over that or neighboring regions.