In this paper we present a retrieval algorithm for atmospheric remote sensing. The algorithm combines Tikhonov regularization and the iteratively regularized Gauss–Newton method and is devoted to the solution of multi-parameter inverse problems with simple bounds on the variables. The basic features of the algorithm: the solution of the bound-constrained minimization problem, the selection of the optimal regularization parameter, the derivation of the global regularization matrix and the characterization of the solution (error analysis) are discussed in detailed. The inversion algorithm is applied to ozone retrieval from SCIAMACHY limb scatter measurements in the ultraviolet spectral range.