&ggr;-ray flashes of atmospheric origin as well as blue jets and red sprites are naturally explained by high-altitude discharges produced by runaway air breakdown. We present the first detailed model of the development of upward propagating discharges and compute optical and &ggr;-ray emissions that are in excellent agreement with observations. According to our theory, such discharges represent the first known manifestation of runaway air breakdown, a fundamental new process in plasma physics. ¿ American Geophysical Union 1996