Radiatively active gases (i.e., greenhouse gases) in a planet's atmosphere radiate energy in all directions. Part of this radiation is directed towards the surface, thus warming it. 

The intensity of downward radiation – that is, the strength of the greenhouse effect – depends on the amount of greenhouse gases that the atmosphere contains. The temperature rises until the intensity of upward radiation from the surface, thus cooling it, balances the downward flow of energy.

Earth's natural greenhouse effect is critical to supporting life, and initially was a precursor to life moving out of the ocean onto land. Human activities, mainly the burning of fossil fuels and clearcutting of forests, have increased the greenhouse effect and caused global warming.

The planet Venus experienced a runaway greenhouse effect, resulting in an atmosphere which is 96% carbon dioxide, and a surface atmospheric pressure roughly the same as found 900 m (3,000 ft) underwater on Earth. Venus may have had water oceans, but they would have boiled off as the mean surface temperature rose to the current 735 K (462 °C; 863 °F).

The term "greenhouse effect" continues to see use in scientific circles and the media despite being a slight misnomer, as an atmosphere reduces radiative heat loss, while a greenhouse blocks convective heat loss.

The result, however, is an increase in temperature in both cases.

Earth receives energy from the Sun in the form of ultraviolet, visible, and near-infrared radiation. About 26% of the incoming solar energy is reflected to space by the atmosphere and clouds, and 19% is absorbed by the atmosphere and clouds. Most of the remaining energy is absorbed at the surface of Earth. Because the Earth's surface is colder than the Sun, it radiates at wavelengths that are much longer than the wavelengths that were absorbed. Most of this thermal radiation is absorbed by the atmosphere and warms it. The atmosphere also gains heat by sensible and latent heat fluxes from the surface. The atmosphere radiates energy both upwards and downwards; the part radiated downwards is absorbed by the surface of Earth. This leads to a higher equilibrium temperature than if the atmosphere did not radiate.

An ideal thermally conductive blackbody at the same distance from the Sun as Earth would have a temperature of about 5.3 °C (41.5 °F). However, because Earth reflects about 30% of the incoming sunlight, this idealized planet's effective temperature (the temperature of a blackbody that would emit the same amount of radiation) would be about −18 °C (0 °F). The surface temperature of this hypothetical planet is 33 °C (59 °F) below Earth's actual surface temperature of approximately 14 °C (57 °F). The greenhouse effect is the contribution of greenhouse gases to this difference.