<p>In atmospheric chemistry retrievals and data assimilation systems, observation errors associated with satellite radiances are chosen empirically and generally treated as uncorrelated. In this work, we estimate inter-channel error covariances for the Infrared Atmospheric Sounding Interferometer (IASI) and evaluate their impact on ozone assimilation with the chemical transport model MOCAGE (MOdèle de Chime Atmospheric à Grand Echelle). The method used to calculate observation errors is a diagnostic based on the observation and analysis residual statistics already adopted in numerical weather prediction centers. We used a subset of 280 channels covering the spectral range between 980 and 1100 cm<sup>−1</sup> to estimate the observation error covariance matrix. We computed hourly 3D-Var analyses and compared the resulting O<sub>3</sub> fields against ozonesondes and the measurements provided by the Microwave Limb Sounder (MLS).</p> <p>The results show significant differences between using the estimated error covariance matrix with respect to the empirical diagonal matrix employed in previous studies. The validation of the analyses against independent data reports a significant improvement especially in the tropical stratosphere. The computational cost has also been reduced when the estimated covariance is employed in the assimilation system.</p>