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Forest inventories are important tools for the management of forests. In this context, the estimation of the tree stem volume is a key issue. In this paper, we present a system for the estimation of forest stem diameter and volume at individual tree level from multireturn light detection and ranging (LIDAR) data. The proposed system is made up of a preprocessing module, a LIDAR segmentation algorithm (aimed at retrieving tree crowns), a variable extraction and selection procedure, and an estimation module based on support vector regression (SVR) (which is compared with a multiple linear regression technique). The variables derived from LIDAR data are computed from both the intensity and elevation channels of all available returns. Three different methods of variable selection are analyzed, and the sets of variables selected are used in the estimation phase. The stem volume is estimated with two methods: 1) direct estimation from the LIDAR variables and 2) combination of diameters and heights estimated from LIDAR variables with the species information derived from a classification map according to standard height/diameter relationships. Experimental results show that the system proposed is effective and provides high accuracies in both the stem volume and diameter estimations. Moreover, this paper provides useful indications on the effectiveness of SVR with LIDAR in forestry problems.