This research aims to develop the strategy and method to enhance the reliability of image matching results and improve the efficiency of the matching process by utilizing LIDAR data in the main image matching processes. In this work, we present the methods to utilize LIDAR data in the selection of matching entities, the search for the matched entities and the evaluation of the matching results. The proposed method has been applied to medium-resolution digital aerial images and LIDAR data acquired at the same time. The results have been analyzed in comparison with an existing method using a virtual horizontal surface rather than LIDAR DEM. This analysis indicates that the proposed method can show significantly more improved performance than the existing method. The results of this study can contribute to the improvement of the currently available commercial image matching software and the enhancement of the DEM derived from LIDAR data and matching results.