Abstract A principal component analysis (PCA) method is applied to Challenging Minisatellite Payload (CHAMP) level-2 radio occultation (RO) observations and the corresponding global analyses from the National Centers for Environmental Prediction (NCEP) in March 2004. The PCA is performed on a square symmetric vertical correlation matrix of observed or modeled RO profiles. By decomposing the matrix into pairs of loadings (EOFs) and associated principal components (PCs), outliers are identified and important modes that explain most variances of the vertical variability of the atmosphere as represented by the GPS RO data and the NCEP analyses are extracted and compared. Specifically, a quality control of RO data based on Hotelling’s T 2 index is applied first, which removes 255 RO profiles from 4884 total profiles (about 5%) and smoothes the distributions of PC modes, making the remaining GPS RO dataset much more meaningful. The leading PC mode for global refractivity explains 60% of the total variance and is associated with a symmetric zonal pattern, with positive anomalies in the Tropics and negative anomalies at the two poles. The second PC mode explains an additional 16% of the total variance and shows a dipole pattern with positive anomalies in the North Pole and negative anomalies in the South Pole. Three significant positive anomalies are also found in the second and third PC modes over three predominant convective areas in the western Pacific, South America, and Africa in the Tropics. The first leading PC mode calculated from global NCEP analyses compared favorably with that from CHAMP observations, which proves that NCEP analyses are capable of representing most of the variance of the atmospheric profiles. However, disagreements between CHAMP observations and NCEP analyses are noticed in the second EOF over the Tropics and the Southern Hemisphere (SH). It is also found that the NCEP analyses describe CHAMP-observed larger vertical scale features better than smaller-scale features, captures features of more leading EOF modes in the Northern Hemisphere than in the SH and the Tropics, and does not capture the vertical structures revealed by the EOFs in CHAMP observations near and above the tropopause in the Tropics.