Variations in terrestrial water storage affect weather, climate, geophysical phenomena, and life on land, yet observation and understanding of terrestrial water storage are deficient. However, estimates of terrestrial water storage changes soon may be derived from observations of Earth's time-dependent gravity field made by NASA's Gravity Recovery and Climate Experiment (GRACE). Previous studies have evaluated that concept using modeled soil moisture and snow data. This investigation builds upon their results by relying on observations rather than modeled results, by analyzing groundwater and surface water variations as well as snow and soil water variations, and by using a longer time series. Expected uncertainty in GRACE-derived water storage changes are compared to monthly, seasonal, and annual terrestrial water storage changes estimated from observations in Illinois (145,800 km2). Assuming those changes are representative of larger regions, detectability is possible given a 200,000 km2 or larger area. Changes in soil moisture are typically the largest component of terrestrial water storage variations, followed by changes in groundwater plus intermediate zone storage. ¿ 2001 American Geophysical Union