The accuracy of velocity tomograms reconstructed from borehole transmission traveltime data is highly sensitive to traveltime statics. We present a least-squares tomography algorithm that includes a traveltime static term. The algorithm solves for both the velocity field and the traveltime statics simultaneously. This enables us to separate traveltime signal from traveltime noise, reducing the tomographic velocity artifacts caused by the statics. The incorporation of a priori constraints on the poorly determined spectral components of the velocity field further improves accuracy by reducing velocity artifacts as a result of uneven ray coverage. Application of the algorithm to numerical crosswell data results in velocity and statics' estimates that are accurate to within 1 percent. Application of the algorithm to Exxon's Friendswood tomography data results in velocity and statics' estimates that correlate with independent data.