A method for discriminating Types Ia and Ib Polar Stratospheric Clouds (PSCs) from Polar Ozone and Aerosol Measurement (POAM) satellite occultation measurements of aerosol extinction coefficient is described. The method has been validated by applying several statistical tests to the results and by using Differential Absorption Lidar (DIAL) and Ozone Lidar Experiment (OLEX) lidar observations made during Stratospheric Aerosol and Gas Experiment (SAGE) III Ozone Loss and Validation Experiment/Third European Stratospheric Experiment on Ozone II (SOLVE/THESEO 2000). Type Ia PSCs are believed to be composed of large nitric-acid-containing particles that will sediment out of the stratosphere, causing denitrification and facilitating ozone depletion. Type Ib PSCs are believed to be much smaller and will not sediment out of the stratosphere. Discriminating between these two types of PSCs is significant because it will permit a better understanding of ozone depletion today and predict the fate and effect of PSCs using the more continuous temporal coverage and larger areal coverage that can be obtained from satellites. The method is made possible by the character of POAM observations when plotted as normalized extinction versus wavelength dependence. As the extinction increases, observations of Types Ia and Ib PSCs bifurcate. This behavior is also observed in idealized simulations of the formation of Supercooled Ternary Solutions (STS) and nitric acid trihydrate (NAT) particles, which are believed to make up Types Ib and Ia PSCs, respectively. Analysis of POAM observations from the 1999/2000 Arctic winter using the PSC discrimination algorithm revealed that the number of PSC observations peaked in January. In November, December, and January, the ratio of Type Ia to Ib PSCs was about 3. In February and March, this ratio was about 0.3. The average altitude of Type Ia PSCs descended more than the Type Ib, especially in the spring where the Type Ia observations were 2–3 km below the Type Ib observations. This is consistent with observations of denitrification during the 1999/2000 winter. The PSC discrimination algorithm is applicable to previous winters in both hemispheres and will work with SAGE III observations as well. This will permit a more extensive study of the statistical significance of some features of the PSCs observed during the 1999/2000 Arctic winter. It is our belief that the present method of analyzing satellite data to discriminate Type I PSCs will be of great utility in the study of PSCs and ozone depletion.