Abstract: A waterproof shoe construction and its method of manufacture is disclosed. The shoe has a liner which is impervious to liquid water but pervious to water vapor, a first innersole and a second innersole with a rib. There is a film impervious to liquid water but pervious to water vapor cemented between the first and second innersoles. A horizontal stitch connects the shoe side panels and the rib of the second innersole between the walls of a channel-shaped welt top, which welt bottom is cemented to the top of an outersole. The method of manufacture is a special blend of stitch down and cement construction techniques which allows for a comfortable, waterproof shoe at a lower manufacturing cost.