In this study, we discuss two features of the boundary layer that are influenced by the heating and cooling of the terrain surrounding Phoenix and describe how these features affect the vertical transport and mixing of pollutants. A mesoscale model is used along with the measurements to interpret the atmospheric processes during the field campaign period. The first feature to be discussed is the capping inversion at the top of the residual layer. Although the mixed layer generally grew steadily during the course of the day, on a few days the capping inversion was found to descend during the afternoon. The reduced mixed layer depth and the sinking motions associated with the interaction of the thermally-driven circulations and the synoptic flow were conducive to a build up of pollutants on these days. The second feature to be discussed is the depth of the atmosphere to which cooling extends during the night. The potential temperature profiles indicated significant cooling usually occurred to at least 1000 m AGL and on some nights to considerably greater depths. There was an apparent elevated residual layer in the morning sounding but the layer was noticeably cooler than the mixed layer the previous day. One effect of this elevated cooling is to retard the subsequent growth of the mixed layer in the afternoon, which has implications for the vertical mixing of pollutants. These boundary layer features do not fit the relatively simple picture of boundary layer evolution that is often assumed for fair weather conditions over flat terrain. The model is used to examine the effects of vertical motions induced by shear between the flows over the mountains and those over the adjacent valleys and other possible mechanisms that can contribute to the observed behavior.