Though water in its liquid state is of central importance to a vast number of problems in the sciences, in engineering, and in health and environmentally related areas, it remains a mysterious and misunderstood material. It seems to violate the very basis of our 20th century scientific training-starting from first principles. For this reason, one of the most important of all scientific problems remains in a chaotic state of understanding, stifling progress in many other fields. Many scientists feel that this old problem must surely have been solved, or for other reasons is simply not worth worrying about, and continue to visualize water in incorrect ways. However, it is noteworthy that not until our own recent work :was any one of the roughly ten anomalous properties of this liquid understood at a molecular level. In fact,it is rather easy to show that every intermolecular potential model currently used for water has the same basic flaw-too great a dominance by Coulomb terms. This flaw prevents such models from providing a realistic picture of water's anomalous properties. Since water is more and more becoming considered not simply a solvent but an integral part of chemical and biological systems, it is now urgent to determine its true character. One has first to create a ''working model'' that is consistent with water's anomalies. Next, because the ''first principle'' understanding of water extends only from the monomer to nanoscale clusters, a new intermolecular potential, whose consequences extend beyond nanoscale, is proposed. The success of this new potential in helping to explain all the anomalies supports the view that our new ''working model'' can provide a valid molecular-level description of this material. (C) 1997 American Institute of Physics.