The measurements from satellite microwave imaging and sounding channels are simultaneously utilized through a one-dimensional (1-D) variation method (1D-var) to retrieve the profiles of atmospheric temperature, water vapor and cloud water. Since the radiative transfer model in this 1D-var procedure includes scattering and emission from the earth's atmosphere, the retrieval can perform well under all weather conditions. The iterative procedure is optimized to minimize computational demands and to achieve better accuracy. At first, the profiles of temperature, water vapor, and cloud liquid water are derived using only the AMSU-A measurements at frequencies less than 60 GHz. The second step is to retrieve rain and ice water using the AMSU-B measurements at 89 and 150 GHz. Finally, all AMSU-A/B sounding channels at 50-60 and 183 GHz are utilized to further refine the profiles of temperature and water vapor while the profiles of cloud, rain, and ice water contents are constrained to those previously derived. It is shown that the radiative transfer model including multiple scattering from clouds and precipitation can significantly improve the accuracy for retrieving temperature, moisture and cloud water. In hurricane conditions, an emission-based radiative transfer model tends to produce unrealistic temperature anomalies throughout the atmosphere. With a scattering-based radiative transfer model, the derived temperature profiles agree well with those observed from aircraft dropsondes.