The problem of reduction of magnetic and gravity data, when observed on an arbitrary surface in a region of high topographic relief, is studied with equivalent source representation at the points of observation. It is shown that the analytical relationship between the total magnetic field or the gravity effect and equivalent magnetization or density on an arbitrary observational surface is given by a Fredholm integral equation of the second kind. A rapidly convergent iterative scheme is described for the solution of the integral equation, yielding the surface distribution of magnetization or density. With this distribution, the field at any other surface can be easily computed. Then it has been demonstrated with model examples that the gravity or magnetic field observed on a rough terrain can be accurately reduced to a horizontal plane for processing and interpretation.A new method has been suggested for minimization of terrain-induced anomalies on a magnetic or gravity map. This method is based on the concept that when the anomalous field observed on an arbitrary surface is continued to a surface parallel to the topography, the terrain effect in the continued field is sharply reduced relative to the field created by bodies of finite extent in the crust. Model examples are presented to show the accuracy and reliability of the method.