Urbanization has major impacts on regional climate, including all elements of the water cycle. This study is designed to advance the understanding of urbanization effects on regional climate, with a special focus on warm season rainfall and hydrologic response in urban watersheds. The principal study regions are two megacities, the New York – New Jersey urban corridor and the Beijing metropolitan region. They both exhibit complex topography, with mountains, land-ocean boundaries and heterogeneous land cover associated with urbanization providing a challenging setting for regional climate studies. Analyses are built on measurements from multiple observing systems and simulations with regional climate models. Flash flooding in the New York – New Jersey urban corridor is associated with organized convective systems that produce extreme short-term (1– 30 minutes) rainfall rates. Climatological analyses of rainfall in the Beijing metropolitan region are based principally on regional climate model simulations with the Weather Research and Forecasting (WRF) model and satellite rainfall fields from TMPA (TRMM Multisatellite Precipitation Analysis). The urban core of Beijing has fewer rain days and higher rainfall intensity compared to the surrounding region. Simulation studies illustrate the affects of altered land surface fluxes from urban regions on the regional precipitation climatology. These effects are linked to storm dynamics and cloud microphysical processes. Analyses of heavy rainfall events during the 2008 Beijing Olympics, which are principally based on 3–D radar reflectivity observations and WRF simulations, highlight the diverse storm environments associated with heavy rainfall. Urbanization effects on heavy rainfall are linked to these elements of storm environment, especially atmospheric controls on moisture transport and instability. Numerical experiments using the WRF model show that spatial and temporal distribution of heavy precipitation are influenced by urbanization impacts linked to urban heat island, urban canopy and urban aerosols. In addition, simulations using WRF coupled with online chemistry (WRF–Chem) were performed to examine the effectiveness of emission reduction measures and the role of regional transport of pollutants on Beijing's air quality during the 2008 Olympic Games from a policy perspective.