An investigation into a potentially important, but little-studied effect on altimeter data—rain contamination—has been carried out using ERS-1. The method involves identifying large changes in the radar backscatter coefficient and relating these to atmospheric liquid water estimates obtained from an onboard microwave radiometer. The latter is found to provide a useful means of distinguishing between wind and rain events. In general, the backscatter coefficient is reduced most when the liquid water content is high, and by an amount that is consistent with atmospheric attenuation at the radar frequency in use. However, some examples of enhanced backscatter were also observed indicating a possible reduction in surface roughness by the impact of raindrops on the ocean surface. Examination of return pulse shapes across significant rain events reveals behavior consistent with published theoretical work and shows how rain may lead to loss-of-lock in extreme conditions. The results of this study have implications for improved data quality flagging procedures and correction of ERS-1 altimeter winds.