This paper describes the heat transfer mechanisms operating as heat moves downward in the soil along steep temperature gradients during both wildfires and prescribed fires. The transfer of heat downward in the upper part of the soil is enhanced by the vaporization and movement of water and organic compounds. Available information on the changes in the chemistry of vaporized organic compounds is summarized and discussed. An operational theory describing the formation of a highly water repellent soil condition during fire is presented. The relationship between the formation of this fire-related watershed condition and subsequent surface runoff and erosion from wildland ecosystems is explored. Worldwide literature describing fire-induced water repellency is reviewed and summarized.