An iterative stochastic approach is developed to estimate transmissivity and head distributions in heterogeneous aquifers. This approach is similar to the classical cokriging technique; it uses a linear estimator that depends on the covariances of transmissivity and hydraulic head and their cross covariance. The linear estimator is, however, improved successively by solving the governing flow equation and by updating the covariances and cros-covariance function of transmissivity and hydraulic head fields in an iterative manner. As a result the nonlinear relationship between transmissivity and head is incorporated in the estimation, and the estimated fields are approximate conditional means. The ability of the iterative approach is tested with some deterministic and stochastic inverse problems. The results show that the estimated transmissivity and hydraulic head fields have smaller mean square errors than those obtained by classical cokriging even in the aquifer with variance of transmissivity up to 3. ¿ American Geophysical Union 1996.