Humidity of the free troposphere has been long recognized as an important factor modulating moist convection. The most spectacular example is the impact of dry intrusions on the tropical convection. By moistening its immediate environment, convection renders it more favorable for future convection. Convective parameterizations, which have to be used in traditional large-scale weather prediction and climate models, are often quite insensitive to the environmental free-tropospheric humidity. This presentation consists of two parts. First, we will present results from European Community project EUROCS which, among other themes, aimed at i) documenting impact of free-tropospheric humidity on moist convection using cloud-resolving modeling approach, and ii) using these results to improve sensitivity of tradiational convective parameterizations to free-tropospheric humidity. Second, we will present results from idealized numerical simulations illustrating the impact of free-tropospheric humidity on large-scale organization on tropical convection. This can be understood as a feedback process which involves moist convection, free-tropospheric moisture, and the large-scale flow. This feedback causes perturbations in moist convection to strengthen perturbations of the free-tropospheric moisture, which, in turn, affect the spatial distribution of moist convection. The large-scale circulation, which develops in response to spatial fluctuations of convective heating, plays an important role in this feedback because, through the effect of the large-scale subsidence, it makes areas with suppressed convection even drier. Intractive radiative transfer strengthens this feedback loop considerably because more radiative cooling, and thus more subsidence, occures in dry cloud-free areas. We will argue that the weakness of this feedback loop is a likely explanation for the weak intraseasonal variability observed in large-scale weather and climate models.