Large-loop electromagnetic (EM) systems that measure transient EM (TEM) data on the surface or in boreholes have shown increased application in exploration geophysics. Accurate interpretation of borehole TEM data is necessary to discover deep hidden targets that cannot be detected with surface systems. However, the inversion of borehole TEM data has not been fully addressed. In this paper, we study the propagation of the TEM field from a large-loop EM borehole system inside a layered earth and develop a new inversion algorithm to reconstruct layered conductivity structures from large-loop TEM data measured with both surface and borehole configurations. The magnetic field and sensitivities are first computed in the frequency domain and are then transformed into the time domain where the inversion is performed. The surface data have a higher S/N ratio at early time channels, while the borehole data have a higher S/N ratio at late time channels. Consequently, the surface data can be inverted to better resolve shallow structures, and the borehole data can be used to better detect deep structures. The merits of joint inversions of borehole and surface data are explored. We test our inversion algorithm using numeric examples.