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To provide some advanced technical bases (algorithms and procedures) and experience needed for national large-scale digital orthophoto generation and revision of the Standards for National Large-Scale City Digital Orthophoto in the National Digital Orthophoto Program (NDOP), this paper presents a comprehensive study on theories, algorithms, and methods of large-scale urban orthoimage generation. The procedures of orthorectification for digital terrain model (DTM)-based and digital building model (DBM)-based orthoimage generation and their mergence for true orthoimage generation are discussed in detail. A method of compensating for building occlusions using photogrammetric geometry is developed. The data structure needed to model urban buildings for accurately generating urban orthoimages is presented. Shadow detection and removal, the optimization of seamline for automatic mosaic, and the radiometric balance of neighbor images are discussed. Street visibility analysis, including the relationship between flight height, building height, street width, and relative location of the street to the imaging center, is analyzed for complete true orthoimage generation. The experimental results demonstrated that our method can effectively and correctly orthorectify the displacements caused by terrain and buildings in urban large-scale aerial images.