Algorithms developed to estimate cloud optical properties from satellite observations are based on radiative transfer models that assume clouds to be plane-parallel homogeneous entities. In this study, the effect of the plane-parallel assumption on the retrieval of cloud optical thickness and effective particle radius is examined through the use of a three- dimensional (3-D) radiative transfer model. Satellite observed radiances are simulated for 3-D stratus and convective cloud fields. Optical properties are retrieved from these fields and compared to the known inputs. Results show that for the stratus field the plane-parallel assumption is reasonable for most solar and viewing geometries. However, for a combination of a high solar zenith angle and a viewing angle towards the sun the bias becomes significant at high spatial resolutions. In contrast, retrieving cloud properties for the convective cloud at any spatial scale is not possible using the plane- parallel assumption.© (1999) COPYRIGHT SPIE--The International Society for Optical Engineering. Downloading of the abstract is permitted for personal use only.