Vertically integrated budgets of moisture, heat, angular momentum and kinetic energy are calculated from the composite data sets of Part I (McBride, 1981). The transition from cloud cluster to typhoon/hurricane is characterized by a warming of the troposphere and increase of tangential wind. Observations are presented to show that these effects are not restricted to the system's inner core region, but rather take place over a volume extending out to at least 6° latitude radius from the system center. Accordingly, in this paper cyclogenesis is investigated by analyzing budgets over this large scale. The heat budget calculations show that the observed warming of the troposphere is an order of magnitude smaller than the other terms in the budget equation. Most of the released latent heat LP0 is exported laterally through the boundaries of the region through conversion to the term ∇·Vs. The portion of LP0 which is released within the volume acts to counter the net radiative cooling QR. All the compos... Abstract Vertically integrated budgets of moisture, heat, angular momentum and kinetic energy are calculated from the composite data sets of Part I (McBride, 1981). The transition from cloud cluster to typhoon/hurricane is characterized by a warming of the troposphere and increase of tangential wind. Observations are presented to show that these effects are not restricted to the system's inner core region, but rather take place over a volume extending out to at least 6° latitude radius from the system center. Accordingly, in this paper cyclogenesis is investigated by analyzing budgets over this large scale. The heat budget calculations show that the observed warming of the troposphere is an order of magnitude smaller than the other terms in the budget equation. Most of the released latent heat LP0 is exported laterally through the boundaries of the region through conversion to the term ∇·Vs. The portion of LP0 which is released within the volume acts to counter the net radiative cooling QR. All the compos...