A new cloud microphysics scheme including a prognostic treatment of cloud ice (PCI) is developed to yield a more physically based representation of the components of the atmospheric moisture budget in the general circulation model ECHAM. The new approach considers cloud water and cloud ice as separate prognostic variables. The precipitation formation scheme for warm clouds distinguishes between maritime and continental clouds by considering the cloud droplet number concentration, in addition to the liquid water content. Based on several observational data sets, the cloud droplet number concentration is derived from the sulfate aerosol mass concentration as given from the sulfur cycle simulated by ECHAM. Results obtained with the new scheme are compared to satellite observations and in situ measurements of cloud physical and radiative properties. In general, the standard model ECHAM4 and also PCI capture the overall features, and the simulated results usually lie within the range of observed uncertainty. As compared to ECHAM4 only slight improvements are achieved with the new scheme. For example, the overestimated liquid water path and total cloud cover over convectively active regions are reduced in PCI. On the other hand, some shortcomings of the standard model such as underestimated shortwave cloud forcing over the extratropical oceans of the respective summer hemisphere are more pronounced in PCI.