It has been experimentally established that there exists a normal component of magnetic field on the magnetopause and that open field lines connect polar cap with interplanetary medium. To explain this information, it is necessary to develop a quantitative theory of an open magnetosphere and to study the structure of the magnetopause. The magnetosheath and the magnetosphere are considered as a unitary system. The dissipative MHD approach is used outside the magnetopause, and the magnetostatic approach is used inside. The frozen-in condition is valid anywhere except at the magnetopause which is considered to be a thin dissipative boundary layer separating the magnetosheath and the magnetosphere. The magnetopause thickness is proportional to Rm-1/2 (where Rm is the magnetic Reynolds number) and is about 100 times less than stand-off distance. The magnetic field near the magnetopause is formed due to mutual diffusion of the magnetospheric magnetic field in the magnetosheath and IMF into the magnetosphere. The magnetospheric magnetic field component normal to the magnetopause is proportional to Rm-1/2 and is about 1 nT at the dayside magnetopause. The related potential difference across the open field lines is about 15 kV, which can be responsible for the background electric field measured in the polar caps. The portion of IMF which penetrates into the magnetosphere is proportional to Rm-1/4 and is about a factor of 10 less than the IMF. The potential difference across the polar cap is about 100 kV for the southward IMF of -10 nT. ¿ American Geophysical Union 1995.