In an annual summary of the climate of 2006, the Climate Monitoring Branch of the National Climatic Data Center provides an overview of conditions throughout the US and around the world during the past year. As the scientific community works to better understand our changing climate, continual monitoring provides vital information on climate variability, continuing trends and the incidence of extreme events. Our primary focus is on placing the recent climate record in historical perspective based on more than 125 years of in-situ temperature and precipitation measurements as well as paleoclimate records that extend our understanding of the earth's climate to the more distant past. Included is a discussion of century-scale variability and trends in temperature and precipitation as well as extreme events such as droughts, tornadoes and tropical storms. The increase in global temperatures recorded over the past 100+ years has occurred in all seasons and throughout almost all regions of the world. There is also evidence that a more rapid rise in global temperatures that began in the 1970's is continuing and indications of increases in climate extremes during the past several decades.