The problem of radiometric correction of multispectral scanner data is posed as the problem of determining an intrinsic reflectance factor characteristic of the surface material being imaged and invariant to topography, position of the sun, atmosphere and position of the viewer. A scene radiance equation for remote sensing is derived based on an idealized physical model of image formation. The scene radiance equation is more complex for rugged terrain than for flat terrain since it must model slope, aspect and elevation dependent effects. Scene radiance is determined by the bidirectional reflectance distribution function (BRDF) of the surface material and the distribution of light sources. The sun is treated as a collimated source and the sky is treated as a uniform hemispherical source. The atmosphere is treated as an optically thin, horizontally uniform layer. The limits of this approach are reviewed using results obtained with Landsat MSS images and a digital terrain model (DTM) of a test site near St. Mary Lake, British Columbia, Canada. New results, based on regression analysis, are described for the St. Mary Lake site. Previous work is extended to take advantage of explicit forest cover data and to consider numeric models of sky radiance. The calculation of sky irradiance now takes occlusion by adjacent terrain into account. The results for St. Mary Lake suggest that the cosine of the incident solar angle and elevation are the two most important correction terms. Skylight and inter-reflection from adjacent terrain, however, also are significant.