A newly reprocessed, bias-corrected version of hourly satellite observations that provides global coverage of precipitation at high space-time resolution is evaluated and compared with climate model simulations. Irregular subdaily fluctuations are the dominant component around the world, greater than variance of daily mean precipitation, and much greater than variance associated with the mean diurnal cycle of precipitation. Irregular subdaily fluctuations of precipitation are severely underestimated by models, even after taking into account the observational “error bars” implied by different space-time resolutions. Variance of daily mean precipitation is less severely underestimated. Although mean diurnal cycle amplitudes vary among the models, this component is but a small part of total precipitation variance. Therefore, the total precipitation variance is significantly underestimated by models in general. Further exploration of model-data discrepancies in precipitation at high-time frequency may lead to new and useful climate model diagnostics. ©2018. The Authors.