Satellite-based radar interferometry is a technique capable of measuring small surface elevation changes at large scales and with a high resolution. In vadose zone hydrology, it has been recognized for a long time that surface elevation changes due to swell and shrinkage of clayey soils can serve as an estimate for soil water storage change. Therefore, satellite-based radar interferometry can potentially offer an alternative methodology to estimate soil water storage change at field or regional scales. This paper introduces principles of satellite-based radar interferometry and identifies limitations and potential applications of the technique to measure surface elevation changes from clay shrinkage. In situ measurements were performed and a linear relation between soil water storage depletion and layer shrinkage was obtained. Data from the TerraSAR-X satellite over the measurement area were analyzed to identify the most favorable conditions for radar interferometry to measure vertical shrinkage. High-quality phase observations over clayey areas in polders with limited vegetation can be explained from differences in land use and soil type. Signal noise over sparsely vegetated agricultural fields was successfully reduced by multilooking over agricultural fields at the cost of spatial resolution. Good resemblance between in situ measured shrinkage and differential phase change was found in a test period. Based on this study, we expect that radar interferometric processing of data from the future satellite mission Sentinel-1 can play a crucial role in providing much-needed observations of vadose zone processes at the field scale and beyond.