Ray theory approach has been used to derive the frequency equation for Love waves in a transversely anisotropic and laterally inhomogeneous N-layered earth model. Linear variation of velocity in lateral direction is considered. The dispersion equation has been obtained by taking the average of two frequency equations: one for the left and the other for the right side of the observation point. The derivation of frequency equations are based on computation of phase shifts along the ray trajectory, at different interfaces due to refractions and at the last interface due to reflection. To illustrate the effect of lateral inhomogeneity and anisotropy on Love wave propagation, numerical computations have been performed and dispersion curves for a two-layered model are presented.