The objective of this research is to develop a new stochastic modeling approach that can be used to characterize three-dimensional groundwater flow and contaminate transport at heterogeneous sites under realistic field conditions. The research is particularly concerned with the design of a characterization tool that can adapt to nonstationary hydrological and geological conditions. So far, stochastic methods have not been developed to the point at which they can be routinely used for solving groundwater contamination problems because current methods either require excessive computational power or they are too restrictive in the assumptions that must be made. This research will extend, reformulate and generalize the nonstationary spectral method recently developed by the PI and present a novel way for its numerical implementation. The effectiveness of the new modeling approach will be illustrated with an application to an appropriate field site and systematic comparison with existing deterministic and stochastic models and large-scale numerical simulations.