This study presents the first direct comparison of terrestrial water storage estimates from the Gravity Recovery and Climate Experiment (GRACE) satellite mission to in situ hydrological observations. Monthly anomalies of total water storage derived from GRACE gravity fields are compared with combined soil moisture and groundwater measurements from a network of observing sites in Illinois. This comparison is achieved through the use of a recently developed filtering technique designed to selectively remove correlated errors in the GRACE spectral coefficients. Application of this filter significantly improves the spatial resolution of the GRACE water storage estimates, and produces a time series which agrees quite well (RMS difference = 20.3 mm) with the in situ measurements averaged over an area of ~280,000 km2.