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Advances in the development and application of lidar as a tool for the remote sensing of atmospheric aerosols and clouds are reviewed. The lidar sensing technique is described, and various approaches for solving the lidar equation to retrieve aerosol properties are summarized. Examples are presented of lidar applications of aerosol and cloud sensing in both the troposphere and stratosphere. These include environmental monitoring, atmospheric boundary layer studies, retrieval of aerosol optical and physical properties, sensing of clouds, and investigation of volcanic effects in the stratosphere. Comments are offered regarding the future outlook for aerosol and cloud sensing by both ground-based and spaceborne lidar.