Key Points: • The concept of precipitation efficiency is broad, and can be related to many proposed cloud feedback mechanisms • Microphysical precipitation efficiency of tropical clouds likely increases with warming, but bulk precipitation efficiency and precipitation efficiency of midlatitude clouds could decrease • The impacts of precipitation efficiency on clouds and feedbacks deserve further study and require better evaluation against observations A number of studies have demonstrated strong relationships between precipitation efficiency, particularly its changes under warming, and climate sensitivity. In this chapter, we review the evidence for these relationships, including how they depend on the definition of precipitation efficiency. We identify six mechanisms by which changes in precipitation efficiency may affect Earth’s net climate feedback, and also discuss evidence for an inverse relationship between present-day precipitation efficiency and climate sensitivity based on several perturbed physics ensembles. This inverse relationship hints at the possibility of developing emergent constraints on climate sensitivity using precipitation efficiency, though it is put in doubt by studies varying convective entrainment rates, which have found the opposite relationship. More work is required to refine our understanding of the mechanisms linking changes in precipitation efficiency to climate sensitivity and more observational data is needed to validate model results. In particular, the precipitation efficiency of mid-latitude clouds has been relatively understudied, but deserves more attention in light of the importance of extratropical cloud feedbacks for the high climate sensitivities of CMIP6 models.