<p>Launched in October 2017, the TROPOspheric Monitoring Instrument (TROPOMI) aboard Sentinel-5 Precursor provides the potential to monitor air quality over point sources across the globe with a spatial resolution as high as 5.5 km × 3.5 km (7 km × 3.5 km before 6 August 2019). The nitrogen dioxide (NO<sub>2</sub>) retrieval algorithm for the TROPOMI instrument consists of three steps: the spectral fitting of the slant column, the separation of stratospheric and tropospheric contributions, and the conversion of the slant column to a vertical column using an air mass factor (AMF) calculation. In this work, an improved tropospheric NO<sub>2</sub> retrieval algorithm from TROPOMI measurements over Europe is presented.</p> <p>The stratospheric estimation is implemented using the STRatospheric Estimation Algorithm from Mainz (STREAM), which was developed as a verification algorithm for TROPOMI and does not require chemistry transport model data as input. A directionally dependent STREAM (DSTREAM) is developed to correct for the dependency of the stratospheric NO<sub>2</sub> on the viewing geometry by up to 2 × 10<sup>14</sup> molec/cm<sup>2</sup>. Applied to synthetic TROPOMI data, the uncertainty in the stratospheric column is 3.5 × 10<sup>14</sup> molec/cm<sup>2</sup> for polluted conditions. Applied to actual measurements, the smooth variation of stratospheric NO<sub>2</sub> at low latitudes is conserved, and stronger stratospheric variation at higher latitudes are captured.</p> <p>For AMF calculation, the climatological surface albedo data is replaced by geometry-dependent effective Lambertian equivalent reflectivity (GE_LER) obtained directly from TROPOMI measurements with a high spatial resolution. Mesoscale-resolution a priori NO<sub>2</sub> profiles are obtained from the regional POLYPHEMUS/DLR chemistry transport model with the TNO-MACC emission inventory. Based on the latest TROPOMI operational cloud parameters, a more realistic cloud treatment is provided by a clouds-as-layers (CAL) model, which treats the clouds as uniform layers of water droplets, instead of the clouds-as-reflecting-boundaries (CRB) model, in which clouds are simplified as Lambertian reflectors.</p> <p>For the error analysis, the tropospheric AMF uncertainty, which is the largest source of NO<sub>2</sub> uncertainty for polluted scenarios, ranges between 20 % and 50 %, leading to a total uncertainty in the tropospheric NO<sub>2</sub> column in the 30–60 % range. From a validation performed with ground-based multi-axis differential optical absorption spectroscopy (MAX-DOAS) measurements, the improved tropospheric NO<sub>2</sub> data shows good correlations for nine European urban/suburban stations with an average correlation coefficient of 0.78. The implementation of the algorithm improvements leads to a decrease of the relative difference from −55.3 % to −34.7 % on average.</p>