The accuracy and the resolution of water-vapor measurements by use of the ground-based differential absorption lidar (DIAL) system of the Max-Planck-Institute (MPI) are determined. A theoretical analysis, intercomparisons with radiosondes, and measurements in high-altitude clouds allow the conclusion that, with the MPI DIAL system, water-vapor measurements with a systematic error of <5% in the whole troposphere can be performed. Special emphasis is laid on the outstanding daytime and nighttime performance of the DIAL system in the lower troposphere. With a time resolution of 1 min the statistical error varies between 0.05 g/m(3) in the near range using 75 m and-depending on the meteorological conditions-approximately 0.25 g/m(3) at 2 km using 150-m vertical resolution. When the eddy correlation method is applied, this accuracy and resolution are sufficient to determine water-vapor flux profiles in the convective boundary layer with a statistical error of <10% in each data point to approximately 1700 m. The results have contributed to the fact that the DIAL method has finally won recognition as an excellent tool for tropospheric research, in particular for boundary layer research and as a calibration standard for radiosondes and satellites.