A Fresh View of the Coronal Heating Problem from TRACE Markus J. Aschwanden (LMSAL) Solar & Astrophysics Laboratory Lockheed Martin Advanced Technology Center The heating of solar and stellar atmospheres, which have coronae several orders of magntitude hotter than their photospheres, is still a puzzling problem. However, progress has been made with the localization of the heating function with recent TRACE and SoHO data, namely that the heating seems to be concentrated in the lowest 10,000 km of the corona. There are now at least three major observational constraints that the heating of the corona results from chromospheric energization processes: 1) the overdensity of coronal loops, 2) observed upflows of heated plasma, and 3) the heating function with a scale height of s_H~10,000 km. We review a representative selection of coronal heating models (AC heating, DC heating, magnetic reconnection heating, etc) in the light of these new observational constraints, and discuss inconsistencies between theoretical models and observations.