Abstract: Contour line is one of the commonly used data sources for DEM generation, and the interpolation method has a significant impact on the accuracy of the contours-derived DEM. However, most of the existing interpolation methods generate low-accuracy DEM due to unreasonable methodologies. In this paper, an interpolation method is presented to build DEM from contour lines by integration of morphological reconstruction and distance transformation with obstacles. Particularly, morphological reconstruction is used to get the elevation values of the higher contour lines and the lower contour lines of any a spatial point between two contour lines, and distance transformation with obstacles is used to get the geodesic distances of the spatial point to the higher contour lines and the lower contour lines respectively. At last, linear interpolation along steepest slope is used to get the elevation values of the pixels to be interpolated. The experiments demonstrate that the accuracy of the DEM generated by our method is higher than the one generated by Hu Peng's MADEM method if only contours are employed to interpolate a DEM.