The Lund–Potsdam–Jena Dynamic Global Vegetation Model (LPJ) combines process-based, large-scale representations of terrestrial vegetation dynamics and land-atmosphere carbon and water exchanges in a modular framework. Features include feedback through canopy conductance between photosynthesis and transpiration and interactive coupling between these ‘fast’ processes and other ecosystem processes including resource competition, tissue turnover, population dynamics, soil organic matter and litter dynamics and fire disturbance. Ten plants functional types (PFTs) are differentiated by physiological, morphological, phenological, bioclimatic and fire-response attributes. Resource competition and differential responses to fire between PFTs influence their relative fractional cover from year to year. Photosynthesis, evapotranspiration and soil water dynamics are modelled on a daily time step, while vegetation structure and PFT population densities are updated annually. Simulations have been made over the industrial period both for specific sites where field measurements were available for model evaluation, and globally on a 0.5°° × 0.5°° grid. Modelled vegetation patterns are consistent with observations, including remotely sensed vegetation structure and phenology. Seasonal cycles of net ecosystem exchange and soil moisture compare well with local measurements. Global carbon exchange fields used as input to an atmospheric tracer transport model (TM2) provided a good fit to observed seasonal cycles of CO2 concentration at all latitudes. Simulated inter-annual variability of the global terrestrial carbon balance is in phase with and comparable in amplitude to observed variability in the growth rate of atmospheric CO2. Global terrestrial carbon and water cycle parameters (pool sizes and fluxes) lie within their accepted ranges. The model is being used to study past, present and future terrestrial ecosystem dynamics, biochemical and biophysical interactions between ecosystems and the atmosphere, and as a component of coupled Earth system models.