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Phase transitions of atmospheric water play a ubiquitous role in the Earth's climate system, but their direct impact on atmospheric dynamics has escaped wide attention. Here we examine and advance a theory as to how condensation influences atmospheric pressure through the mass removal of water from the gas phase with a simultaneous account of the latent heat release. Building from fundamental physical principles we show that condensation is associated with a decline in air pressure in the lower atmosphere. This decline occurs up to a certain height, which ranges from 3 to 4 km for surface temperatures from 10 to 30 °C. We then estimate the horizontal pressure differences associated with water vapor condensation and find that these are comparable in magnitude with the pressure differences driving observed circulation patterns. The water vapor delivered to the atmosphere via evaporation represents a store of potential energy available to accelerate air and thus drive winds. Our estimates suggest that the global mean power at which this potential energy is released by condensation is around one per cent of the global solar power – this is similar to the known stationary dissipative power of general atmospheric circulation. We conclude that condensation and evaporation merit attention as major, if previously overlooked, factors in driving atmospheric dynamics.