The water retention characteristic is one of the fundamental properties that control water movement in unsaturated soils. Because of the complexity and heterogeneity of soil properties, variability and uncertainty of this property has long been a key issue in understanding the relationship between water content and matric pressure. Although considerable progress has been achieved in understanding spatial and local variability, discussions have primarily been based on deterministic analyses. Misleading conclusions can result since the derived variability cannot often be discriminated from uncertainties in model parameters, structure, and observed data. Using a combined deterministic and stochastic analysis, this paper addresses the variability of the retention characteristic in association with the uncertainty of water retention models. Calibrated against two sets of lysimeter data observed over 2 years, the analysis yields insights into the physical changes in the system, and model performance is significantly improved when these effects are explicitly included. ¿ 1999 American Geophysical Union