A model based upon steady‐state diffusion theory which describes the radial dependence of diffuse reflectance of light from tissues is developed. This model incorporates a photon dipole source in order to satisfy the tissue boundary conditions and is suitable for either refractive index matched or mismatched surfaces. The predictions of the model were compared with Monte Carlo simulations as well as experimental measurements made with tissue simulating phantoms. The model describes the reflectance data accurately to radial distances as small as 0.5 mm when compared to Monte Carlo simulations and agrees with experimental measurements to distances as small as 1 mm. A nonlinear least‐squares fitting procedure has been used to determine the tissue optical properties from the radial reflectance data in both phantoms and tissues in vivo. The optical properties derived for the phantoms are within 5%–10% of those determined by other established techniques. The in vivo values are also consistent with those reported by other investigators.