In an air conditioning system for circulating cooled air to an enclosed space, a controller including a temperature sensor, a humidity sensor and a microcontroller for controlling the indoor fan or blower to prevent operation of same if a fan run-on mode is selected or continuous fan operation is selected and the humidity sensed in the enclosed space is greater than a predetermined amount. Continuous fan operation is allowed unless the humidity exceeds a user defined setpoint during an air cooling operating mode. If the humidity sensed is greater than the predetermined amount, the fan is operated only when the system is providing cooled air, such as when the system compressor is energized.