This report describes a series of detailed soil-water tracer experiments conducted in a natural landscape and investigates three distinct approaches to numerically model the flow and transport behavior observed in the field experiments. These experimental and numerical results strongly suggest that current widely held views and commonly applied modeling approaches are flawed in many cases for unsaturated flow. The field experiments provide strong supporting evidence for a variable, state-dependent anisotropy in the hydraulic conductivity of an unsaturated medium. This phenomenon has been previously postulated in a number of independent theoretical and experimental investigations. In general, these studies identify layered heterogeneity as a primary cause of the macroscopic anisotropy. In addition, we show how hysteresis-enhanced moisture content variations can cause a texturally homogeneous porous media profile to behave anisotropically under transient unsaturated conditions. Recognizing that both of these factors (layered heterogeneity and capillary hysteresis) contribute the anisotropic behavior observed in the tracer experiments, we attempt to quantify the relative magnitude of their contributions in a numerical modeling investigation. For the numerical modeling study we use a finite element flow and transport code, and we introduce a simple procedure for incorporating variable anisotropy into the model. Based on a first-order sensitivity analysis of a stochastic estimator of variable anisotropy (Yeh et al.,1985b), we make anisotropy a single-valued function of pressure head in our implementation of this phenomenom. To determine the relative magnitude of textural heterogeneity and capillary hysteresis as contributors to the observed macroscopic anisotropy, we employ a diagnostic modeling approach. The results of the diagnostic modeling study indicate that textural heterogeneity is by far the most important contributor to the variable macroscopic anisotropy observed-at the field site, and they further show that the variable anisotropy approach is well suited to modeling field-scale problems. Subsequently, a sensitivity analysis is performed to determine how climate, geologic and topographic structure, and media lithology affect flow and transport behavior when soils were specified to have a variable macroscopic anisotropy. The results of this study clearly indicate that variable state-dependent anisotropy is a real and significant process at the field site and that modeling with consideration of variable anisotropy strongly affects model predictions. There is a practical need to further investigate this variable anisotropy phenomenom and determine how it may affect our understanding of a wide variety of hydrological processes.