For surface reconstruction problems with noisy and incomplete range data, a Bayesian estimation approach can improve the overall quality of the surfaces. The Bayesian approach to surface estimation relies on a likelihood term, which ties the surface estimate to the input data, and the prior, which ensures surface smoothness or continuity. This paper introduces a new high-order, nonlinear prior for surface reconstruction. The proposed prior can smooth complex, noisy surfaces, while preserving sharp, geometric features, and it is a natural generalization of edge-preserving methods in image processing, such as anisotropic diffusion. An exact solution would require solving a fourth-order partial differential equation (PDE), which can be difficult with conventional numerical techniques. Our approach is to solve a cascade system of two second-order PDEs, which resembles the original fourth-order system. This strategy is based on the observation that the generalization of image processing to surfaces entails filtering the surface normals. We solve one PDE for processing the normals and one for refitting the surface to the normals. Furthermore, we implement the associated surface deformations using level sets. Hence, the algorithm can accommodate very complex shapes with arbitrary and changing topologies. This paper gives the mathematical formulation and describes the numerical algorithms. We also show results using range and medical data.