Classical homogeneous nucleation theory is extended to nonisothermal conditions through simultaneous cluster mass and energy balances. The transient nucleation of water vapor following a sudden increase in saturation ratio is studied by numerically solving the coupled mass and energy balance equations. The ultimate steady state nucleation rate, considering nonisothermal effects, is found to be lower than the corresponding isothermal rate, with the discrepancy increasing as the pressure of the background gas decreases. After the decay of the initial temperature transients, subcritical clusters in the vicinity of the critical cluster are found to have temperatures elevated with respect to that of the background gas.