Using a numerical model of solar radiative transfer that is calibrated against benchmark computations, it is shown that atmospheric water vapor, together with the microphysical characteristics of water drops (liquid water path and effective radius), plays an important role in the total solar spectrum reflection and absorption in overcast skies. For any specific cloud type, the water vapor column above the cloud and the presence of saturated water vapor inside the cloud contribute significantly to atmospheric absorption. These factors also affect the relationship between the net shortwave fluxes at the top and bottom of overcast atmospheres, in particular, inhibiting a general universal linkage between these two quantities. Thus neglect of details concerning the vertical location, extent, and microphysical aspects of clouds can lead to biases in the inference of surface irradiance using top-of-the-atmosphere measurements. ¿ 1999 American Geophysical Union