Aerosol has been widely recognized as a key climate agent that can alter both energy and water cycles and thus impinges significantly upon earth’s climate. To a large extent, its impact on the water cycle is unclear. It can affect clouds and precipitation in a variety of ways that can either suppress or foster its development depending on individual conditions but the overall effect is poorly known. Using a 10-year dataset of extensive Atmospheric Radiation Measurements (ARM) collected in the U. S. Southern Great Plains and global A-Train satellite observations, the long-term and global impact of aerosols on cloud and rainfall frequency is revealed and various effects are sorted out under different meteorological and cloud conditions. Cloud top height and thickness are found to increase (most significantly in summer) with aerosol concentration measured near the ground for warm-based mixed-phase clouds of tops below -4°C, but little changes are found for pure liquid or ice clouds, and for clouds with high cloud bases. The response of precipitation depends on cloud liquid water content: increasing for deep clouds with high water content and decreasing for clouds with low water content. The observational findings are reproduced with a cloud-resolving model. They provide unprecedented evidence of strong long-term net effects of aerosols on clouds and precipitation and confirm the underlying fundamental physical mechanisms. These findings have significant implications for anthropogenic influences on Earth’s climate and its changes, and even for sustainable economic development.