A new way to perform space missions utilizes the concept of clusters of satellites that cooperate to perform the function of a larger, single satellite. Each smaller satellite communicates with the others and shares the processing, communications, and payload or mission functions. The required functionality is thus spread across the satellites in the cluster, the aggregate forming a "virtual satellite". The Air Force Research Laboratory (AFRL) Space Vehicles directorate initiated the TechSat 21 program to explore the basic technologies required to enable such distributed satellite systems. For this purpose, Space Based Radar (SBR) was selected as a reference mission to help identify technology requirements and to allow an easy comparison to a conventional approach. A summary of the basic mission and the performance requirements is provided. The satellite cluster approach to space missions requires science and technology advances in several key areas. Each of these challenges is described in some detail, with specific stressing requirements driven by the SBR reference mission. These TechSat 21 research and technology areas are being studied in a coordinated effort between several directorates within AFRL and the Air Force Office of Scientific Research. Projects Agency are jointly funding 10 universities with grants of $50k/year over two years to design and assemble 10–12 nanosatellites (approx 10kg each) for launch in November 2001. The universities are conducting creative low-cost space experiments to explore the military usefulness of nanosatellites in such areas as formation flying, enhanced communications, miniaturized sensors and thrusters, and attitude control. AFRL is developing a deployment structure and providing advanced microsatellite hardware, and NASA This paper is declared a work of the U.S. Government and is not subject to copyright protection in the United States. Goddard is providing advanced crosslink communication and navigation hardware and flight algorithms to demonstrate formation flying. Numerous industry partners are also supporting the universities with hardware, design expertise, and test facilities. Areas of particular interest to the TechSat 21 program include autonomous operation and simplified ground control of satellite clusters, intersatellite communications, distributed processing, and formation control. This paper summarizes both hardware and computational challenges that have been identified in both the TechSat 21 and the university nanosatellite programs for implementing operational satellite subsystems to accomplish these tasks.