The heat budget has been computed locally over the entire globe for each month of 1988 using compatible top-of-the-atmosphere radiation from the Earth Radiation Budget Experiment combined with European Centre for Medium Range Weather Forecasts atmospheric data. The effective heat sources and sinks (diabatic heating) and effective moisture sources and sinks for the atmosphere are computed and combined to produce overall estimates of the atmospheric energy divergence and the net flux through the Earth's surface. On an annual mean basis, this is directly related to the divergence of the ocean heat transport, and new computations of the ocean heat transport are made for the ocean basins. Results are presented for January and July, and the annual mean for 1988, along with a comprehensive discussion of errors. While the current results are believed to be the best available at present, there are substantial shortcomings remaining in the estimates of the atmospheric heat and moisture budgets. The issues, which are also present in all previous studies, arise from the diurnal cycle, problems with atmospheric divergence, vertical resolution, spurious mass imbalances, initialized versus uninitialized atmospheric analyses, and postprocessing to produce the atmospheric archive on pressure surfaces. Over land, additional problems arise from the complex surface topography, so that computed surface fluxes are more reliable over the oceans. The use of zonal means to compute ocean transports is shown to produce misleading results because a considerable part of the implied ocean transports is through the land. The need to compute the heat budget locally is demonstrated and results indicate lower ocean transports than in previous residual calculations which are therefore more compatible with direct ocean estimates. A Poisson equation is solved with appropriate boundary conditions of zero normal heat flux through the continental boundaries to obtain the ocean heat transport. Because of the poor observational data base, adjustments to the surface fluxes are necessary over the southern oceans. Error bars are estimated based on the large-scale spurious residuals over land of 30 W m−2 over 1000 km scales (1012 m2). In the Atlantic Ocean, a northward transport emerges at all latitudes with peak values of 1.1±0.2 PW (1 standard error) at 20 to 30°N. Comparable values are achieved in the Pacific at 20°N, so that the total is 2.1±0.3 PW. The peak southward transport is at 15 to 20°S of 1.9±0.3 PW made up of strong components from both the Pacific and Indian Oceans and with a heat flux from the Pacific into the Indian Ocean in the Indonesian throughflow. The pattern of poleward heat fluxes is suggestive of a strong role for Ekman transports in the tropical regions.