In this paper, Split-Step Wavelet Method (SSWM) is proposed to model radio wave propagation in horizontally inhomogeneous environment. The performance of SSWM is investigated for laterally heterogeneous environment condition. Further, Split-Step Fourier transform Method (SSFM) is implemented on the same platform to model radio wave propagation under similar environmental conditions. Finally, results are compared with those from Split-step Fourier Method (SSFM). Results show a good agreement with SSFM. From the obtained results, it can be concluded that the proposed method has an ability to forecast the behavior of radio wave propagation in horizontally inhomogeneous environment as accurately as SSFM and it can be a good alternative to other conventional methods. © 2012 IEEE.