The first consistent year (November 2000 to November 2001) of global albedo product was produced at 1-km resolution every 16 days from the observations of the Moderate-Resolution Imaging Spectroradiometer (MODIS) instrument aboard NASA's Terra spacecraft. We evaluated the quality of the operational albedo retrievals in two ways: (1) by examining the algorithm performance using the product quality assurance (QA) fields (this paper) and (2) by comparing retrieved albedos with those observed at ground stations and by other satellite instruments (in a companion paper). The internal diagnostics of the retrieval algorithm adequately reflect the goodness of the model fit and the random noise amplification in the retrieved albedo. Global QA statistics show that the RossThick-LiSparse-Reciprocal model fits the atmospherically corrected surface reflectances very well, and the random noise amplification factors for white sky albedo and reflectance are generally less than 1.0. Cloud obscuration is the main reason for the activation of the backup magnitude retrieval algorithm. Over the 60°S to 60°N latitude band, 50% of the land pixels acquire more than six clear looks during 14–29 September 2001, and only 5% of these pixels are inverted with the backup algorithm. The latitude dependence and temporal distribution of the QA fields further demonstrate that the retrieval status mainly follows the pattern of angular sampling determined by cloud climatology and the instrument/orbit characteristics. A case study over the west coast of the United States shows that white sky shortwave albedos retrieved from magnitude inversions agree on average with those from full inversions to within 0.033 in reflectance units and have a slightly lower bias ranging from 0.014 to 0.023. We also explored the effect of residual cloud and aerosol contamination in the atmospherically corrected surface reflectance inputs in another case study over southern Africa. The quality assurance procedure of the operational MODIS bidirectional reflectance distribution function and albedo algorithm compensates for some of these residual effects and improves the albedo retrieval results by an order of 0.005 (10%) in the visible for more than 12% of pixels.