Soil moisture is an essential climate variable (ECV) of major importance for land-atmosphere interactions and global hydrology. An appropriate representation of soil moisture dynamics in global climate models is therefore important. Recently, a first multidecadal, observation-based soil moisture dataset has become available that provides information on soil moisture dynamics from satellite observations (ECVSM, essential climate variable soil moisture). The present study investigates the potential and limitations of this new dataset for several applications in climate model evaluation. We compare soil moisture data from satellite observations, reanalysis and simulations from a state-of-the-art land surface model and analyze relationships between soil moisture and precipitation anomalies in the different dataset. Other potential applications like model parameter optimization or model initialization are not investigated in the present study. In a detailed regional study, we show that ECVSM is capable to capture well the interannual and intraannual soil moisture and precipitation dynamics in the Sahelian region. Current deficits of the new dataset are critically discussed and summarized at the end of the paper to provide guidance for an appropriate usage of the ECVSM dataset for climate studies. © 2013 Author(s).