An iterative lidar-signal inversion method is presented that is valid for two-component (molecular andaerosol) scattering atmospheres. The iterative procedure transforms the original lidar signal, thereby making it possible to use the lidar-equation solution for a single-component atmosphere. In a manner analogous to Fernald's approach, the molecular extinction profile is used as a foundation for the boundary-condition determination, but the inversion procedure can be performed with either constant or variable (range-dependent) phase functions. A specific region in the measured range is located at which the ratio of the aerosol to molecular extinction coefficients is a minimum as determined by an examinationof the lidar-signal profile; for this region boundary conditions are specified.