Star formation depends on the available gaseous fuel as well as galactic environment, with higher specific star formation rates where gas is predominantly molecular and where stellar (and dark matter) densities are higher. The partition of gas into different thermal components must itself depend on the star formation rate, since a steady state distribution requires a balance between heating (largely from stellar UV for the atomic component) and cooling. In this presentation, I discuss a simple thermal and dynamical equilibrium model for the star formation rate in disk galaxies, where the basic inputs are the total surface density of gas and the volume density of stars and dark matter, averaged over ∼kpc scales. Galactic environment is important because the vertical gravity of the stars and dark matter compress gas toward the midplane, helping to establish the pressure, and hence the cooling rate. In equilibrium, the star formation rate must evolve until the gas heating rate is high enough to balance this cooling rate and maintain the pressure imposed by the local gravitational field. In addition to discussing the formulation of this equilibrium model, I review the current status of numerical simulations of multiphase disks, focusing on measurements of quantities that characterize the mean properties of the diffuse ISM. Based on simulations, turbulence levels in the diffuse ISM appear relatively insensitive to local disk conditions and energetic driving rates, consistent with observations. It remains to be determined, both from observations and simulations, how mass exchange processes control the ratio of cold-to-warm gas in the atomic ISM.