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This paper proposes a hierarchical two-step localization method for heterogeneous sensor networks. The network consists of three types of nodes: anchor nodes with known locations, a few nodes equipped with both Ultra-Wide Band (UWB) and RF radios, and a large number of sensor nodes called Lite Nodes. By using a hierarchical network architecture and UWB technology, only a small number of anchor nodes are needed. The localization method works in two steps. First, UWB nodes estimate their locations by using the built-in high-precision distance measurement and locations of anchor nodes. Next, Lite Nodes use UWB nodes as references to estimate their locations. The performance of iterative and non-iterative localization methods are compared. It is observed through simulations that iterative method produces much smaller localization error. The effects of UWB node placement and other parameters such as measurement noise, number of anchor nodes, and communication ranges on the resulting localization error are also presented.