Satellite images have been widely used to produce land use and land cover maps and to generate other thematic layers through image processing. However, images acquired by sensors onboard various satellite platforms are affected by a systematic sensor and platform-induced geometry errors, which introduce terrain distortions, especially when the sensor does not point directly at the nadir location of the sensor. To this extent, an automated processing chain of WorldView-3 image orthorectification is presented using rational polynomial coefficient (RPC) model and laser scanning data. The research is aimed at analyzing the effects of varying resolution of the digital surface model (DSM) derived from high-resolution laser scanning data, with a novel orthorectification model. The proposed method is validated on actual data in an urban environment with complex structures. This research suggests that a DSM of 0.31 m spatial resolution is optimum to achieve practical results (root-mean-square error = 0:69 m) and decreasing the spatial resolution to 20 m leads to poor results (root-mean-square error = 7:17). Moreover, orthorectifying WorldView-3 images with freely available digital elevation models from Shuttle Radar Topography Mission (SRTM) (30 m) can result in an RMSE of 7.94 m without correcting the distortions in the building. This research can improve the understanding of appropriate image processing and improve the classification for feature extraction in urban areas.