Abstract Cloud-affected microwave humidity sounding radiances were excluded from assimilation in the hybrid four-dimensional ensemble–variational (4D-EnVar) system of the Global Deterministic Prediction System (GDPS) at Environment and Climate Change Canada (ECCC). This was due to the inability of the current radiative transfer model to consider the scattering effect from frozen hydrometeors at these frequencies. In addition to upgrading the observation operator to RTTOV-SCATT, quality control, bias correction, and 4D-EnVar assimilation components are modified to perform all-sky assimilation of Microwave Humidity Sounder (MHS) channel 2–5 observations over ocean in the GDPS. The input profiles to RTTOV-SCATT are extended to include liquid cloud, ice cloud, and cloud fraction profiles for the simulation and assimilation of MHS observations over water. There is a maximum (35%) increase in the number of channel 2 assimilated MHS observations with smaller increases for channels 3–5 in the all-sky experiment compared to the clear-sky experiment, mostly because of newly assimilated cloud-affected observations. The standard deviation (stddev) of difference between the observed global positioning system radio occultation (GPSRO) refractivity observations and the corresponding simulated values using the background state was reduced in the lower troposphere below 9 km in the all-sky experiment. Verifications of forecasts against the radiosonde observations show statistically significant reductions of 1% in the stddev of error for geopotential height, temperature, and horizontal wind for the all-sky experiment between 72- and 120-h forecast ranges in the troposphere in the Northern Hemisphere domain. Verifications of forecasts against ECMWF analyses also show small improvements in the zonal mean of stddev of error for temperature and horizontal wind for the all-sky experiment between 72- and 120-h forecast ranges. This work was planned for operational implementation in the GDPS in fall 2023.