Radio occultation (RO) bending angle and impact parameter values are derived from a Doppler shift measurement, assuming spherical symmetry. The purpose of this work is to illustrate the errors that arise when this assumption is not valid. Doppler shift values have been simulated for ray paths through a three-dimensional refractive index field derived from a mesoscale model forecast, which has a horizontal grid of 12 km by 12 km, and includes water vapor. These have then been inverted, making the spherical symmetry assumption. It is demonstrated that refractive index gradients perpendicular to the ray path can cause errors in both the bending angle and impact parameter values, but the latter is the more significant. It is shown that the impact parameter value at the tangent point can differ by around ~100 m from the derived value. This can cause an effective bending angle error exceeding ~10% near the surface. A statistical analysis of the errors caused by horizontal gradients for simulations through 54 mesoscale forecasts, using fixed spacecraft trajectories and tangent point locations, is presented. In general, the bending angle errors are found to be ~3% near the surface. A new set of analytical expressions for errors has been derived. These are based on integrating the horizontal gradients along the ray path and are found to be in good agreement with the simulation results. The implications of this work for the assimilation of RO data into numerical weather prediction models are discussed and areas of future work are outlined. ¿ 2001 American Geophysical Union