This report by the Committee on Solar and Space Physics and the Committee on Solar-Terrestrial Research recommends the major directions for scientific research in space physics for the coming decade. As a field of science, space physics has passed through the stage of simply looking to see what is out beyond Earth's atmosphere. It has become a 'hard' science, focusing on understanding the fundamental interactions between charged particles, electromagnetic fields, and gases in the natural laboratory consisting of the galaxy, the Sun, the heliosphere, and planetary magnetospheres, ionospheres, and upper atmospheres. The motivation for space physics research goes far beyond basic physics and intellectual curiosity, however, because long-term variations in the brightness of the Sun virtually affect the habitability of the Earth, while sudden rearrangements of magnetic fields above the solar surface can have profound effects on the delicate balance of the forces that shape our environment in space and on the human technology that is sensitive to that balance. The several subfields of space physics share the following objectives: to understand the fundamental laws or processes of nature as they apply to space plasmas and rarefied gases both on the microscale and in the larger complex systems that constitute the domain of space physics; to understand the links between changes in the Sun and the resulting effects at the Earth, with the eventual goal of predicting the significant effects on the terrestrial environment; and to continue the exploration and description of the plasmas and rarefied gases in the solar system.