The Improved Limb Atmospheric Spectrometer (ILAS), a sensor for stratospheric ozone layer observation using a solar occultation technique, was mounted on the Advanced Earth Observing Satellite (ADEOS), which was put into a Sun-synchronous polar orbit in August 1996. Operational measurements were recorded over high-latitude regions from November 1996 to June 1997. This paper describes the data processing algorithm of Version 5.20 used to retrieve vertical profiles of gases such as ozone, nitric acid, nitrogen dioxide, nitrous oxide, methane, and water vapor from the infrared spectral measurements of ILAS. To simultaneously derive mixing ratios of individual gas species as a function of altitude, the nonlinear least squares method was utilized for spectral fitting, and the onion peeling method was applied to perform vertical profiling. This paper also discusses in detail estimation of errors (internal and external errors) associated with the derived gas profiles and compares the errors with repeatability. The internal error estimated from residuals in spectral fitting was generally larger than the repeatability, which suggests either that some unknown factors have not been incorporated into the forward model for simulating observed transmittance data or that some parameters in the model are inaccurate. The external error was almost comparable in magnitude to the repeatability. Numerical simulations were carried out to investigate performance of the nongaseous correction technique. The results showed that the background level of sulfuric acid aerosols has little effect on the retrieved profiles, while polar stratospheric clouds (PSCs) with extinction coefficients of the order of 10-3 km-1 at a wavelength of 780 nm have nonnegligible effects on the profiles of some gas species. Despite the problems that require further investigations, it is shown that the ILAS Version 5.20 algorithm generates scientifically useful products.