An arc heater development program has been undertaken to develop a large, high-pressure, highpower arc heater capability. A large, state-of-the-art segmented arc heater (H3) has operated successfully and is scheduled to be fully operational at chamber pressures up to 100 atm with a total power of 60 MW in 1996. The H3 arc heater is a 50% geometric scale-up of the existing HI segmented arc heater and is designed to operate at 2.25 times the power of HI. Additionally, an extensive analytical capability to assist in the design and development of segmented arc heaters has been developed. Available modeling techniques are reviewed, current modeling efforts are discussed, and areas needing additional effort are identified. Scaling laws/performance correlations have been used extensively and first-generation performance codes have been available for some 20 years. The basic components of a three-dimensional arc heater code have been developed, extending a three-dimensional Navier- Stokes code by incorporating electromagnetic effects and a multidimensional radiation model. A near-electrode model has been developed for the interface between the flowing air and the solid electrode surface. Water-tunnel vortexbreakdown studies have been carried out to aid in understanding vortex behavior. Additional modeling work required to improve our understanding of arc heater phenomenology include continued development of the three-dimensional code, extension of the near-electrode model to include nonequilibrium effects, and improved modeling for arc path prediction.