Climate Data Records of soil moisture are fundamental for improving our understanding of long-term dynamics in the coupled water, energy, and carbon cycles over land. To respond to this need, in 2012 the European Space Agency (ESA) released the first multi-decadal, global satellite-observed soil moisture (SM) dataset as part of its Climate Change Initiative (CCI) program. This product, named ESA CCI SM, combines various single-sensor active and passive microwave soil moisture products into three harmonised products: a merged ACTIVE, a merged PASSIVE, and a COMBINED active + passive microwave product. Compared to the first product release, the latest version of ESA CCI SM includes a large number of enhancements, incorporates various new satellite sensors, and extends its temporal coverage to the period 1978–2015. In this study, we first provide a comprehensive overview of the characteristics, evolution, and performance of the ESA CCI SM products. Based on original research and a review of existing literature we show that the product quality has steadily increased with each successive release and that the merged products generally outperform the single-sensor input products. Although ESA CCI SM generally agrees well with the spatial and temporal patterns estimated by land surface models and observed in-situ, we identify surface conditions (e.g., dense vegetation, organic soils) for which it still has large uncertainties. Second, capitalising on the results of > 100 research studies that made use of the ESA CCI SM data we provide a synopsis of how it has contributed to improved process understanding in the following Earth system domains: climate variability and change, land-atmosphere interactions, global biogeochemical cycles and ecology, hydrological and land surface modelling, drought applications, and meteorology. While in some disciplines the use of ESA CCI SM is already widespread (e.g. in the evaluation of model soil moisture states) in others (e.g. in numerical weather prediction or flood forecasting) it is still in its infancy. The latter is partly related to current shortcomings of the product, e.g., the lack of near-real-time availability and data gaps in time and space. This study discloses the discrepancies between current ESA CCI SM product characteristics and the preferred characteristics of long-term satellite soil moisture products as outlined by the Global Climate Observing System (GCOS), and provides important directions for future ESA CCI SM product improvements to bridge these gaps.