Abstract: Contour interpolation is of great significance in many fields, such as automated map generalization, map digitization, 3D-terrain rebuilding. For closed and sharply changing contours, many contour interpolation algorithms cannot yield satisfying interpolation results. A new algorithm of contour interpolation is proposed based on analysis of the advantages and disadvantages of existing algorithms. The new algorithm takes the nodes of the contour as the circle centers, then inscribed circles are built which can be used to detect the spatial relationships of the neighboring contours. The auxiliary lines between two neighbor contours can be obtained by the inscribed circles. Then new contours can be interpolated by auxiliary lines. The algorithm improves the speed and quality of interpolation as well as solving problems associated with the existing methods. The validity of this new algorithm is demonstrated by a comparison with those other methods and analysis of the test results.