A key to parameterization of subgrid-scale processes is the probability density function (PDF) of conserved scalars. If the appropriate PDF is known, then grid box average cloud fraction, liquid water content, temperature, and autoconversion can be diagnosed. Despite the fundamental role of PDFs in parameterization, there have been few observational studies of conserved-scalar PDFs in clouds. The present work analyzes PDFs from boundary layers containing stratocumulus, cumulus, and cumulus-rising-into-stratocumulus clouds. Using observational aircraft data, the authors test eight different parameterizations of PDFs, including double delta function, gamma function, Gaussian, and double Gaussian shapes. The Gaussian parameterization, which depends on two parameters, fits most observed PDFs well but fails for large-scale PDFs of cumulus legs. In contrast, three-parameter parameterizations appear to be sufficiently general to model PDFs from a variety of cloudy boundary layers. If a numerical model ignores subgrid variability, the model has biases in diagnoses of grid box average liquid water content, temperature, and Kessler autoconversion, relative to the values it would obtain if subgrid variability were taken into account. The magnitude of such biases is assessed using observational data. The biases can be largely eliminated by three-parameter PDF parameterizations. Prior authors have suggested that boundary layer PDFs from short segments are approximately Gaussian. The present authors find that the hypothesis that PDFs of total specific water content are Gaussian can almost always be rejected for segments as small as 1 km.