Accommodating the large dynamic range of lidar signals is always a challenge for optical engineers. Signals from low altitudes are much larger than signals from high altitudes because of their inverse-range-squared behavior, as well as atmospheric absorption and scattering. It is well known that the onset of received lidar signals with range can be controlled by adjusting the crossover of the laser beam into the receiver field of view. However, a careful analysis has shown that, in many lidar applications much of the system's dynamic range can be used up before the range where the crossover is complete. In addition, the analysis shows that defocus is the primary contributor to the geometrical overlap function in determining the range dependence of the signal, and that understanding defocus is necessary for the optical designer to optimize system performance. Examples are given to illustrate the improvements in dynamic range that can be achieved by optimizing the focus of a lidar receiver.© (2002) COPYRIGHT SPIE--The International Society for Optical Engineering. Downloading of the abstract is permitted for personal use only.