Interpretation of the Doppler-shifted radio frequencies from the proof-of-concept GPS/MET radio occultation experiment is impeded by the effects of multipath propagation caused by strong variations of atmospheric refractivity. In this paper, we describe and validate a method of deciphering the ray structure of the measured electromagnetic field in regions of multipath propagation. The method is based on diffraction theory and the principles of the synthesized aperture, which allows for the refinement of the vertical resolution beyond the Fresnel scale as well as for the improvement of the signal/noise ratio. The validation of the method is based on artificial occultation data simulated using global fields from a NCEP analysis. An example of the application of the diffraction correction algorithm for the processing of real GPS/MET data is given. The comparison of the inversion results with and without diffraction correction indicates a very significant role of multipath propagation in the lower troposphere, which suggests that the diffraction correction can significantly improve the quality of the data processing. ¿ 1998 American Geophysical Union