Measurements collected during the AUSWEX field campaign, at Lake George (Australia), resulted in new insights into the processes of wind wave interaction and whitecapping dissipation, and consequently new parameterizations of the input and dissipation source terms. The new nonlinear wind input term developed accounts for dependence of the growth on wave steepness, airflow separation, and for negative growth rate under adverse winds. The new dissipation terms feature the inherent breaking term, a cumulative dissipation term and a term due to production of turbulence by waves, which is particularly relevant for decaying seas and for swell. The latter is consistent with the observed decay rate of ocean swell. This paper describes these source terms implemented in WAVEWATCH III ®and evaluates the performance against existing source terms in academic duration-limited tests, against buoy measurements for windsea-dominated conditions, under conditions of extreme wind forcing (Hurricane Katrina), and against altimeter data in global hindcasts. Results show agreement by means of growth curves as well as integral and spectral parameters in the simulations and hindcast.