An improved probabilistic lane assignment method for detected objects in the scene forward of a host vehicle. Road/lane model parameters, preferably including an angular orientation of the host vehicle in its lane, are estimated from host vehicle sensor systems, taking into account measurement uncertainty in each of the constituent parameters. A probabilistic assignment of the object's lane is then assessed based on the road/lane model parameters and object measurements, again taking into account measurement uncertainty in both the road/lane model and object measurements. According to a first embodiment, the probabilistic assignment is discrete in nature, indicating a confidence or degree-of-belief that the detected object resides in each of a number of lanes. According to a second embodiment, the probabilistic assignment is continuous in nature, providing a lateral separation distance between the host vehicle and the object, and a confidence or degree-of-belief in the lateral separation distance.