Based on the assumption of compositon homogeneity, a physical picture of hopping conduction in granular metals is develped which gives temperature and electric field dependences of the conductivity in excellent agreement with experiment. The same hopping conduction picture, when coupled with the assumption about spin‐dependent tunneling, is found to explain the striking temperature variation of magnetoresistance in granular Ni‐SiO2. Two material characterization parameters, C and ≳o, are identified which respectively define the temperature and the electric field scales of granular metal systems. The relationship between C and ≳o, and the composition dependence of C are discussed.