Topography significantly affects remotely sensed reflectance data and subsequently impacts the retrieval of the leaf area index (LAI) from surface reflectance data over rugged terrains. However, most LAI inversion algorithms ignore the influence of terrain. This paper quantitatively analyzes the topographic effects on LAI values retrieved from remote sensing data at various spatial scales (30, 90, 270, 540, 1080, and 5400 m) over rugged terrains. The PRO4SAILT (PROSPECT + 4SAILT) model and the Proy algorithm were used to simulate multiscale surface reflectance for different LAI values over rugged terrains. Based on Gaussian process regression (GPR), an LAI inversion algorithm that ignores terrain effects was first developed. The simulated multiscale reflectance data were subsequently input into the inversion algorithm to retrieve LAI values. Finally, the retrieved LAI values were compared with the corresponding reference LAI values. The results demonstrate that the finer the spatial resolution is, the more significant the topographic effects on the retrieved LAI values are. When the reference LAI is five, as the spatial resolution increases from 5400 m to 30 m, the mean percentage error (MPE) of the retrieved LAI increases from 10.46% to 13.72%, and the root mean square error (RMSE) increases from 0.5376 to 1.005. Regardless of the spatial resolution, the error in the retrieved LAI values increases with an increasing terrain slope. When the reference LAI is five and the spatial resolution is 30 m, the MPE at a slope of 15°–30° is close to 5%, and the RMSE is close to 0.3. The MPE at a slope of 30°–45° is close to 20%, and the RMSE is close to one. In addition, the accuracy of the retrieved LAI values is closely related to the sky view factor (SVF). In general, the larger the SVF is, the smaller the error in the retrieved LAI values. In addition, the conversion relationships between the retrieved LAI values using the algorithm that ignores terrain effects and the true LAI values are provided in this study.