9321665 Winglee MHD is one of the main tools used to model the dynamics of the magnetosphere. We show both analytically and numerically that the resistive Ohm's law on which MHD is based is not appropriate for the magnetosphere because much of the plasma and energy transport occurs across thin boundary layers and as a result gives an incomplete description of the magnetospheric current system. We are able to identify for the first time the intrinsic particle effects that control (i) the structure of magnetospheric boundary layers, (ii) the dissipation in current sheets needed for reconnection and (iii) the currents that map into and out of the dayside and nightside auroral regions. These effects are determined from particle/two fluid simulations that provide an advancement over single fluid MHD by removing ambiguities arising from the imposition of anomalous resistivity and by resolving the mapping of the region 1 nd 2 auroral currents. The proposed work seeks development of (i) regional particle simulations in both 2-D and 3-D to identify the structure, current system, and properties of the particle distributions within the magnetopause, LLBL and magnetotail, (ii) modified two-fluid simulations in 3-D to provide full global mapping of the currents emanating from these regions into the auroral region and their effect on the global dynamics through the dissipation they produce on the magnetopause and magnetotail current sheets, and (iii) cross-calibration between the particle and fluid simulations with the Tsyganenko model to test the accuracy of the modeling and, more importantly, to aid in the construction of a model that predicts the average response of the magnetosphere and the auroral currents. The 3-D global simulations are to be based on a modified set of two-fluid equations that have been test calibrated against particle simulations. It uses a modified version of the generalized Ohm's law and incorporates an additional equation describing the electron motion responsible for the dayside and nightside auroral currents. The particle simulations will incorporate a new finite-difference algorithm for the field solutions that can enable variable grid spacing and thereby enable large scale regional modelling of kinetic processes. The proposed work will have important applications to magnetospheric physics by providing global mapping of both magnetic field lines and currents into and out of the magnetosphere, and by identifying the structure and particle distributions associated with critical boundary layers. It has the potential of providing a direct link between ground-based observations of magnetic field perturbations and the motion of the auroral oval with in-situ spacecraft observations of magnetic field perturbations and the motion of the auroral oval with in-situ spacecraft observations of energetic particles. In addition, through the comparison with the Tsyganenko model we will be able to construct an average magnetospheric model that can be used to predict the magnetospheric activity as determined by Kp for prevailing solar wind conditions. All these applications meet important objectives of NSF's Magnetospheric Program. ***