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Published online by Cambridge University Press: 30 March 2016
I review recent theoretical developments in the structure, heating, and ionization of the interstellar medium. Among the unsolved issues are: the vertical support of the gas layer; the ionization source for the H+ layer and diffuse line emission above the Galactic plane; the physics of stochastic heating of small dust grains and the resulting infrared spectra. Turbulent mixing may play an important role in the intercloud medium and diffuse emission above the disk. I conclude with some possible analogies between the intergalactic medium and the interstellar medium.