We present an inversion algorithm for the retrieval of particle size distribution parameters, i.e., mean (effective) radius, number, surface area, and volume concentration, and complex refractive index from multiwavelength lidar data. In contrast to the classical Tikhonov method, which accepts only that solution for which the discrepancy reaches its global minimum, in our algorithm we perform the averaging of solutions in the vicinity of this minimum. This averaging stabilizes the underlying ill-posed inverse problem, particularly with respect to the retrieval of number concentration. Results show that, for typical tropospheric particles and 10% error in the optical data, the mean radius could be retrieved to better than 20% from a lidar on the basis of a Nd:YAG laser, which provides a combination of backscatter coefficients at 355, 532, and 1064 nm and extinction coefficients at 355 and 532 nm. The accuracy is improved if the lidar is also equipped with a hydrogen Raman shifter. In this case two additional backscatter coefficients at 416 and 683 nm are available. The combination of two extinction coefficients and five backscatter coefficients then allows one to retrieve not only averaged aerosol parameters but also the size distribution function. There was acceptable agreement between physical particle properties obtained from the evaluation of multiwavelength lidar data taken during the Lindenberg Aerosol Characterization Experiment in 1998 (LACE 98) and in situ data, which were taken aboard aircraft.