The spectral direct and diffuse irradiances observed by a radiometer with a horizontal surface detector have been frequently used to study aerosol optical parameters, such as aerosol optical thickness (taer) and single scattering albedo (v). Such radiometers more or less lack an ideal cosine response. Generally, either the cosine error of observed diffuse irradiance was corrected by assuming an isotropic distribution of sky radiance or it was neglected in the past studies. This study presents an algorithm to retrieve taer and v from direct and diffuse irradiances observed by a radiometer with a nonideal cosine response characteristic by taking into account the cosine errors of observed irradiances in detail. The proposed algorithm considers the anisotropic distribution of sky radiance while correcting the cosine error of observed diffuse irradiance. This algorithm can also be used to calculate the cosine error correction factor of diffuse irradiance. The results show that the aerosol optical parameters and the aerosol direct effect (aerosol radiative forcing and the heating rate) can be heavily affected by the cosine errors of observed direct and diffuse irradiances. The study further shows that assuming the isotropic distribution of sky radiance while correcting the cosine error of observed diffuse irradiance can affect the retrieved v at small and large solar zenith angles; thus, the estimated aerosol direct effect can be quantitatively affected. Because of the cosine errors, this study found the actual values of diffuse irradiances at different wavelengths were underestimated by around 5%-11%.