Water management is critical to the successful implementation of proton exchange membrane (PEM) fuel cells in the automotive transportation sector. Liquid water appears in the fuel cells not only from the water generated at the cathode catalyst layer but also as a result of condensation of water vapor within the humidified gases. Topics of intense current interest include the microscopic flow of liquid water through the membrane, catalyst layers, and gas diffusion layers; the macroscopic interaction between water and the gas flow at the gas diffusion layer interface; and the two-phase, multicomponent flow through the gas channels. Recent work published in this area is reviewed and recommendations for future work are outlined.