Molecular clouds are the crucial link between gas and stars in a galaxy. Star formation is possible only when and where molecular clouds form, and once these clouds form their internal processes regulate the rate and efficiency of that star formation. Any theory of star formation is therefore first and foremost a theory for the behavior of molecular clouds. In this talk I present models that allow quantitative calculation of the molecular fraction in a galaxy's ISM, the star formation rate in the molecular gas, and the lifetime and star formation efficiency of the clouds. These calculations reproduce the observed properties of local galaxies very well, and I discuss the implications of these results for future observations, and for galaxy formation and evolution beyond the local universe.