Single-footprint Atmospheric Infrared Sounder spectra are used in an optimal estimation-based algorithm (AIRS-OE) for simultaneous retrieval of atmospheric temperature, water vapor, surface temperature, cloud-top temperature, effective cloud optical depth and effective cloud particle radius. In a departure from currently operational AIRS retrievals (AIRS V6), cloud scattering and absorption are in the radiative transfer forward model and AIRS singlefootprint thermal infrared data are used directly rather than cloud-cleared spectra (which are calculated using nine adjacent AIRS infrared footprints). Coincident MODIS cloud data are used for cloud a priori data. Using single-footprint spectra improves the horizontal resolution of the AIRS retrieval from ∼ 45 to ∼ 13.5 km at nadir, but as microwave data are not used, the retrieval is not made at altitudes below thick clouds. An outline of the AIRS-OE retrieval procedure and information content analysis is presented. Initial comparisons of AIRS-OE to AIRS V6 results show increased horizontal detail in the water vapor and relative humidity fields in the free troposphere above the clouds. Initial comparisons of temperature, water vapor and relative humidity profiles with coincident radiosondes show good agreement. Future improvements to the retrieval algorithm, and to the forward model in particular, are discussed.