Abstract: In this article we present a novel radiance caching method for efficiently rendering participating media using Monte Carlo ray tracing. Our method handles all types of light scattering including anisotropic scattering, and it works in both homogeneous and heterogeneous media. A key contribution in the article is a technique for computing gradients of radiance evaluated in participating media. These gradients take the full path of the scattered light into account including the changing properties of the medium in the case of heterogeneous media. The gradients can be computed simultaneously with the inscattered radiance with negligible overhead. We compute gradients for single scattering from lights and surfaces and for multiple scattering, and we use a spherical harmonics representation in media with anisotropic scattering. Our second contribution is a new radiance caching scheme for participating media. This caching scheme uses the information in the radiance gradients to sparsely sample as well as interpolate radiance within the medium utilizing a novel, perceptually based error metric. Our method provides several orders of magnitude speedup compared to path tracing and produces higher quality results than volumetric photon mapping. Furthermore, it is view-driven and well suited for large scenes where methods such as photon mapping become costly.