Abstract A new version of the Community Atmosphere Model (CAM) has been developed and released to the climate community. CAM Version 3 (CAM3) is an atmospheric general circulation model that includes the Community Land Model (CLM3), an optional slab ocean model, and a thermodynamic sea ice model. The dynamics and physics in CAM3 have been changed substantially compared to implementations in previous versions. CAM3 includes options for Eulerian spectral, semi-Lagrangian, and finite-volume formulations of the dynamical equations. It supports coupled simulations using either finite-volume or Eulerian dynamics through an explicit set of adjustable parameters governing the model time step, cloud parameterizations, and condensation processes. The model includes major modifications to the parameterizations of moist processes, radiation processes, and aerosols. These changes have improved several aspects of the simulated climate, including more realistic tropical tropopause temperatures, boreal winter land surface temperatures, surface insolation, and clear-sky surface radiation in polar regions. The variation of cloud radiative forcing during ENSO events exhibits much better agreement with satellite observations. Despite these improvements, several systematic biases reduce the fidelity of the simulations. These biases include underestimation of tropical variability, errors in tropical oceanic surface fluxes, underestimation of implied ocean heat transport in the Southern Hemisphere, excessive surface stress in the storm tracks, and offsets in the 500-mb height field and the Aleutian low.