The main objective of the US-German twin-satellite mission GRACE (Gravity Recovery and Climate Experiment), launched in March 2002, is a precise survey of the Earth’s time-variable gravity field at unprecedented temporal and spatial scales. Temporal changes in the gravity field are related to continuous mass redistributions near the Earth’s surface which are caused by various geophysical and climatologically driven processes. Vice versa, transferring the GRACE-based gravity variations into time series of the spatial variability of surface mass anomalies, the mission allows for the first time for a quantification of the ongoing mass transport. Such data is of unique importance for a comprehensive modeling, understanding and interplay of these processes. In this contribution we give an overview of the basic features of the GRACE satellite mission, the gravity recovery process and the derived gravity products at GeoForschungsZentrum Potsdam (GFZ), as well as the interpretation of the GRACE gravity data with the focus on the detection of hydrological signals. This includes a description of the evolution and present status of the quality of GFZ’s GRACE-based global gravity models on the actual fourth model generation (called GFZ-RL04), and an overview of recent findings using GRACE data in hydrological applications.