The principle advantages of the moon in terms of interferometry at submillimeter and far‐infrared wavelengths are the absence of an atmosphere, the availability of a stable platform, and the possibility of extremely long baselines. At the Smithsonian Astrophysical Observatory, efforts are currently underway to construct a terrestrial submillimeter‐wavelength interferometer on a high mountain site. However, even at an excellent site such as Mauna Kea, the number of nights with less than 1 mm of precipitable water is small, perhaps somewhere between 40 to 80 nights every year. On those occasions, opacities at submillimeter wavelengths down to 350 &mgr;m will be acceptable, while the far‐infrared wavelengths will remain essentially blocked. In addition, the atmospheric extinction introduces phase instability. It can be calculated that seeing of better than 0.1‘will be difficult to achieve from the surface of the earth. Hence a lunar observatory, by virtue of the absence of an atmosphere, will provide transparency, unprecedented phase stability, and thus the kind of angular resolution that would otherwise not be possible.