Directly imaging steeply dipping fault zones is difficult for conventional migration, including reverse-time migration (RTM). We developed a new least-squares RTM (LSRTM) method to directly image steeply dipping fault zones. The method uses a wavefield-separation imaging condition and updated source wavefields during each iteration. Our new imaging method produces horizontal-looking images that show mostly steeply dipping fault zones. Conventional least-squares RTM does not update source wavefields and cannot directly image vertical fault zones. We numerically determined that it is crucial to update source wavefields to image steeply dipping fault zones. Using synthetic seismic data, we proved that our new LSRTM method can directly image steeply dipping fault zones with dipping angles up to 90°. Compared with conventional LSRTM, our LSRTM method was less sensitive to the smoothness and the velocity error of the initial migration velocity model.