We develop a theoretical basis to explain why, as sea-surface temperature (SST) increases, tropical cyclones have increased in intensity globally and are expected to continue to increase in the future and why the global number of tropic cyclones remains essentially unchanged. The central aspect of the theory is the evolution of the “dynamic warm pool”, which encloses the region of net atmospheric convective heating in the tropics. The threshold SST, separating regions of net heating and cooling, has increased with global SST over the past 50 years while the area of the dynamic warm pool has remained constant. However, the magnitude of the net integrated convective heating has increased by 15% since 1950 and is expected to increase by 20% by the end of the current century. We provide a physical explanation for this evolution of the dynamic warm pool. Tropical cyclones form within the dynamic warm pool and the threshold temperatures for tropical cyclone formation have increased over the past 50 years. Yet, the vertically integrated heating thresholds for tropical cyclogenesis have remained constant. Thus, as the integrated heating increases within the dynamic warm pool, higher intensity tropical cyclones develop. Accompanying the increased heating within the dynamic warm pool is an increase in mass flux in and out of region of net heating. This results in increased vertical shear which provides a constraint on cyclone formation on the peripheries of the dynamic warm pool so that the number of tropical cyclones remains effectively constant, even as their intensity increases.