The radiation budget simulated by the European Centre for Medium-Range Weather Forecasts (ECMWF) 40-year reanalysis (ERA40) is evaluated for the period 1979--2001 using independent satellite data and additional model data. This provides information on the quality of the radiation products and indirect evaluation of other aspects of the climate produced by ERA40. The climatology of clear-sky outgoing longwave radiation (OLR) is well captured by ERA40. Underestimations of about 10 W m-2 in clear-sky OLR over tropical convective regions by ERA40 compared to satellite data are substantially reduced when the satellite sampling is taken into account. The climatology of column-integrated water vapor is well simulated by ERA40 compared to satellite data over the ocean, indicating that the simulation of downward clear-sky longwave fluxes at the surface is likely to be good. Clear-sky absorbed solar radiation (ASR) and clear-sky OLR are overestimated by ERA40 over north Africa and high-latitude land regions. The observed interannual changes in low-latitude means are not well reproduced. Using ERA40 to analyze trends and climate feedbacks globally is therefore not recommended. The all-sky radiation budget is poorly simulated by ERA40. OLR is overestimated by around 10 W m-2 over much of the globe. ASR is underestimated by around 30 W m-2 over tropical ocean regions. Away from marine stratocumulus regions, where cloud fraction is underestimated by ERA40, the poor radiation simulation by ERA40 appears to be related to inaccurate radiative properties of cloud rather than inaccurate cloud distributions.