Atmospheric temperature and humidity retrievals from ground-based microwave remote sensing are useful in a variety of meteorological and environmental applications. Though the influence of clouds is usually considered in current retrieval algorithms, the resulting temperature and humidity estimates are still biased high in overcast conditions compared to radiosonde observations. Therefore, there is a need to improve the quality of retrievals in cloudy conditions. This paper presents an approach to make brightness temperature (TB) correction for cloud influence before the data can be used in the inversion of vertical profiles of atmospheric temperature and humidity. A three-channel method is proposed to make cloud parameter estimation, i.e., of the total 22 channels of the ground-based radiometer, three are adopted to set up a relationship between cloud parameters and brightness temperatures, so that the observations from the three channels can be used to estimate cloud thickness and water content and complete the cloud correction for the rest of the channels used in the retrieval. Based on two years of data from the atmosphere in Beijing, a comparison of the retrievals with radiosonde observations (RAOB) shows: (1) the temperature retrievals from this study have a higher correlation with RAOB and are notably better than in the vendor-provided LV2. The bias of the temperature retrievals from this study is close to zero at all heights, and the RMSE is greatly reduced from >5 °C to <2 °C in the layer, from about 1.5 km up to 5 km. The temperature retrievals from this study have higher correlation with RAOB data compared to the vendor-provided LV2, especially at and above a 2 km height. (2) The bias of the water vapor density profile from this study is near to zero, while the LV2 has a positive bias as large as 4 g/m3. The RMSE of the water vapor density profile from this study is <2 g/m3, while the RMSE for LV2 is as large as 10 g/m3. That is, both the bias and RMSE from this study are evidently less than the LV2, with a greater improvement in the lower troposphere below 5 km. Correlation with RAOB is improved even more for the water vapor density. The correlation of the retrievals from this study increases to one within the boundary layer, but the correlation of LV2 with RAOB is only 0.8 at 0.5 km height, 0.7 at 1 km, and even less than 0.5 at 2 km. (3) A parameter named the Cloud Impact index, determined by cloud water concentration and cloud thickness, together with the cloud base height, has been defined to show that both BIAS and RMSE of “high-CI subsample” are larger than those of the “low-CI subsample”, indicating that high-CI cloud has a higher impact on the retrievals and the correction for cloud influence is more necessary.