The discovery of giant planets around other Sun-like stars has stimulated interest in the search for planets capable of supporting life. Here, it is proposed that the abundance of water in the progenitor nebula is a fundamental determinant in the formation of planetary systems like our own, i.e., including an inner, water-rich planet (Earth) and an outer giant planet (Jupiter), The amount of water is a sensitive function of the elemental ratio of carbon to oxygen in the nebula. The Sun appears to be unusual in this respect since the ratio in most nearby stars suggests they formed from relatively water-poor nebulae. Chemical evolution models suggest that the Galactic disk is evolving from an oxidizing, water-rich state toward a carbon-rich, water-poor condition, This may have implications for the appearance and distribution of habitable worlds. (C) 2000 Academic Press.