The annual variation of the global-mean precipitable water 〈W〉 and the associated hydrological cycle were analyzed with the upper-air data generated by the Global Data Assimilation System of the National Meteorological Center for 1981-1991 and the European Centre for Medium Range Weather Forecasts from 1983-1991. It was found that the annual variation of 〈W〉 coincides with that of the Northern Hemisphere precipitable water [W]NH. The hemispheric-mean ([ ]) water budget analysis shows that water vapor is transported from the winter to the summer hemisphere across the equator by the Hadley circulation, and that the annual variations in the water vapor sink [P - E] for both hemispheres also follow the same seasonal march. The amplitudes of the annual variations in these two hydrological processes are comparable in both hemispheres. Thus, the annual variations of [W]NH and [W]SH are the result of slight imbalances between the cross-equator water vapor transport and the water vapor sink, particularly in the spring and fall. The climatological hemispheric-mean water budgets reveal that the Southern Hemisphere is a water vapor source and the Northern Hemisphere is a water vapor sink. The cross-equator water vapor transport constitutes a major source acting to maintain [W]NH, and in turn 〈W〉. The hydrological mechanism maintaining the observed 〈W〉 annual variation is consistent with that obtained from the hydrological cycle in a 10-year (1979-1988) climate simulation done at the Goddard Laboratory for Atmospheres as part of their participation in the Atmospheric Model Intercomparison Project (AMIP).