A method and system for accurately determining the location of the mobile device (10) is disclosed. In the mapping phase collected reference positioning data and collected cell data are used to map a covered area estimation and in the actual location determination phase the covered area estimation is calculated from actual environment data received through wireless cellular communication network (11, 12) and possibly but not necessarily from external databases (17, 19). The covered area estimation comprises at least some of the following calculations: (i) estimation of base station location, (ii) estimation of transmission range, (iii) estimation of signal map and (iv) estimation of area type. The actual location of the mobile device (10) is determined from the covered area estimation based on relative comparison between the actual environment data and estimations (i)-(iv) and weight numbers resulted from the comparison. During the both phases a database is stored in the server (14) and updated whenever new environment data is received.