It is well known that for polymer-electrolyte fuel cells (PEFCs) operating below 100oC water management is a critical issue. If there is too much water, then the catalyst and gas-diffusion layers will become saturated with liquid water and flood; if there is too little, then the membrane becomes highly resistive. In terms of flooding, the liquid water blocks the access of oxygen to the reaction sites. In addition, a heat-pipe effect causes an outward flux of water vapor that also inhibits oxygen from reaching the catalyst layers. Key in controlling water management is the impact of the gas-diffusion layers, especially on the cathode side of the cell. Within these layers, two-phase flow dominates. This talk examines our mathematical modeling approach to gas-diffusion layers with an emphasis on understanding how thermal and water management impact the overall cell performance. Material solutions, such as the use of microporous layers, and operating condition impacts, such as that of the heat-pipe effect, will be discussed.