A key consideration for portable power systems is that they must operate simultaneously at water balance (no external water supply) and thermal balance (controlled temperature). Water and thermal management are intimately linked since evaporation is a potent source of cooling. This paper presents the basic design relationships that govern water and thermal balance in polymer electrolyte membrane (PEM) fuel cell stacks and systems. Hydrogen/air and direct methanol fuel cells are both addressed and compared. Operating conditions for simultaneous water and thermal balance can be specified based on the cell’s electrochemical performance and the operating environment. These conditions can be used to specify the overall size and complexity of the cooling equipment. The water balance properties can have strong effects on the size of the thermal management equipment required.