This project addresses four important issues that will make satellite observations quantitatively more useful and more available for studying the coupled tropical atmosphere-ocean system. First, methods to remove noise and atmospheric contamination from individual satellite datasets are being developed. Second, data fusion techniques to optimally merge different types of satllite (e.g., GMS, TOPEX/POSEIDON, NSCAT) and in situ data (e.g., radiosonde, CTD, buoy) are being implemented. Such data typically are taken on significantly different space-time grids. Using data fusion methods, we can provide a uniform, validated space-time series for a sample region (Indonesia) of a restricted set of important atmospheric and oceanic variables that are useful measures of climate variability with corresponding error budgets. Variables include sea surface temperature (SST), sea surface height, cloud climatology, radiative fluxes, and atmospheric water vapor. Third, we are developing methods for producing succinct, quantitatively useful datasets from large volume geostationary datasets. Fourth, we will use the measurements to examine daily to interannual air-sea heat and fresh water exchange and ocean circulation processes at scales of 10 km to 500 km in the Indonesian Seas. Preliminary results from the first year activities are presented