The Lagrangian Model (LMODEL) is a new multisensor satellite rainfall monitoring methodology based on the use of a conceptual cloud-development model that is driven by geostationary satellite imagery and is locally updated using microwave-based rainfall measurements from low earth-orbiting platforms. This paper describes the cloud development model and updating procedures; the companion paper presents model validation results. The model uses single-band thermal infrared geostationary satellite imagery to characterize cloud motion, growth, and dispersal at high spatial resolution (;4 km). These inputs drive a simple, linear, semi-Lagrangian, conceptual cloud mass balance model, incorporating separate representations of convective and stratiform processes. The model is locally updated against microwave satellite data using a two-stage process that scales precipitable water fluxes into the model and then updatesmodel states using aKalman filter. Model calibration and updating employ an empirical rainfall collocation methodology designed to compensate for the effects of measurement time difference, geolocation error, cloud parallax, and rainfall shear. © 2009 American Meteorological Society.