We have developed a new algorithm for the simultaneous retrieval of the atmospheric profiles (temperature, humidity, ozone and aerosol) and the surface reflectance from hyperspectral radiance measurements obtained from air/space-borne, hyperspectral imagers such as Hyperion EO-1. The new scheme, proposed here, consists of a fast radiative transfer code, based on empirical orthogonal functions (EOFs), in conjunction with a 1D-Var retrieval scheme. The inclusion of an 'exact' scattering code based on spherical harmonics, allows for an accurate treatment of Rayleigh scattering and scattering by aerosols, water droplets and ice-crystals, thus making it possible to also retrieve cloud and aerosol optical properties, although here we will concentrate on non-cloudy scenes. We successfully tested this new approach using hyperspectral images taken by Hyperion EO-1, an experimental pushbroom imaging spectrometer operated by NASA