We present a stable downward continuation strategy based on combining the ideas of the Taylor series expansion and the iterative downward continuation methods in a single method with better downward continuation and/or computer time/memory performance for potential field data containing noise. In the new truncated Taylor series iterative downward continuation (TTSIDC) method, a correction is made on the continuing plane by downward continuing the difference between the observed and the calculated field. The process is iteratively repeated until the difference meets the convergence conditions. It is tested on synthetic and field data and compared to other downward continuation methods. The proposed method yields sharper images and estimates more accurate amplitudes than most of the existing methods, especially for downward continuation over larger distances. The TTSIDC method also gives comparable results to the method of downward continuation using the least-squares inversion (DCLSI); however, the DCLSI method’s requirements of computer memory and time are substantially greater than our TTSIDC method, rendering the DCLSI method impractical for data sets of routine size on desktop computers commonly available today.