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An improved three-component decomposition for polarimetric synthetic aperture radar (SAR) data is proposed in this paper. The reasons for the emergence of negative powers in the Freeman decomposition have been analyzed, and three corresponding improvements are included in the proposed method. First, the deorientation process is applied to the coherency matrix before it is decomposed into three scattering components. Then, the coherency matrix with the maximal polarimetric entropy, i.e., the unit matrix, is used as the new volume-scattering model instead of the original one adopted in the Freeman decomposition. A power constraint is also added to the proposed three-component decomposition. The E-SAR polarimetric data acquired over the Oberpfaffenhofen area in Germany are applied in the experiment. The results show that the pixels with negative powers are totally eliminated by the proposed decomposition, demonstrating the effectiveness of the new model.