The interaction of a satellite with the magnetic field of the earth and the ionized medium through which it is moving has been investigated. Owing to the differing incident velocities of ions and electrons and therefore differing incident flux intensities, a negative potential will be induced on the satellite, but it is smaller than has previously been believed. Satellite motion across the magnetic lines of the earth will induce a voltage on the satellite of as much as 0.2 volt per meter of satellite size, and this may affect the interpretation of measurements of satellite potential. The magnetic drag resulting from the induced currents is proportional to the cube of the satellite dimensions and may exceed the mass drag for satellites larger than 50 meters in diameter; this can occur only above 1200‐km altitude, where the charge density exceeds the neutral density. Thus the magnetically induced current is an insignificant cause of drag. Although some useful power can be extracted from the induced current, it is not a very promising source of auxiliary power for presently conceived vehicle