We have developed an efficient iterative inversion method applicable to both two-dimensional (2D) and three-dimensional magnetotelluric data. The method approximates horizontal derivative terms with their values calculated from the fields of the previous iteration. The equations at each horizontal coordinate then become uncoupled. At each iteration this allows separate inversions for the improved conductivity profile beneach each measurement site. Resultant profiles are interpolated to form a new multidimensional model for which the fields for the next iteration are calculated. The method is extremely fast, and tests with 2D data show very promising results. ¿ American Geophysical Union 1991