The effect of the interaction of SW (shortwave, solar) radiation with ice clouds on climate simulations is studied using the GEOS (Goddard Earth Observing System) climate GCM (general circulation model) coupled with an ocean mixed-layer model. Due to much larger cloud particles, the single-scattering co-albedo of ice clouds is nearly ten times larger than that of water clouds, but the asymmetry factor is generally smaller. Offline calculations with a radiative transfer model show that inclusion of the ice cloud effect increases SW absorption in the upper troposphere and decreases the SW flux at the surface. For the earth-atmosphere system, the change in the SW absorption is small due to compensation of the co-albedo and asymmetry factor effects. The effect of ice clouds tends to increase the atmospheric stability by enhancing SW heating in the upper troposphere and reducing SW heating in the lower troposphere and at the surface. The GCM experiments demonstrate that the inclusion of ice clouds produces colder surface temperature, and leads to reduction in SW heating of the earth-atmosphere system associated with changes in surface albedo and in cloud distribution. The enhanced atmospheric stability leads to decreased high cloud amount by a maximum of 80% and to increased middle cloud by a maximum of 60% over the tropics. ¿ 1998 American Geophysical Union