Matched-field processing (MFP) is being considered increasingly for three-dimensional (3-D) localization of an acoustic source in a noisy ocean environment. MFP consists of comparing the measured acoustic field to the full field computed using a geophysical and a propagation model. Most MFP implementations have involved only range-independent propagation models, and many have been restricted to vertical arrays. However, many realistic environments cannot be adequately described by range-independent models, and the problem of localization using more general arrays is of increasing interest. In this paper, a technique is described for range-dependent MFP with arbitrary arrays, where the field is computed using a parabolic equation (PE) approximation. Using PE, two-dimensional (2-D) field values are computed for each sensor in the array for a set of possible source ranges, depths, and (N) bearings to form an N X2-D field model. Discrete estimates of the position of the source are obtained by applying MFP, with this range-dependent model providing field values at the sensors for possible source positions. Using simulated data, source localization in a noisy range-dependent environment is illustrated for several arrays. For the particular cases studied, a lower level of ambiguity was observed for range-dependent MFP than for a related range-independent problem. The use of range-dependent models in MFP should significantly improve array design and analysis of real data from many locations. PACS numbers: 43.30.Wi, 43.60.Gk. © 1990, Acoustical Society of America. All rights reserved.