The benefits of GNSS have created dependencies on navigation in modern day aviation systems. Many of these systems operate with no backup navigation source. This makes the capabilities supported by precise navigation vulnerable. This paper investigates a contemporary approach to terrain‐referenced navigation (TRN), used to preserve an aircraft's navigation solution during periods of GNSS denial. Traditionally, TRN has been accomplished using a single measurement sensor pointed nadir to an aircraft. Although shown to be effective, this approach limits the achievable navigation accuracy by restricting the measurable terrain gradients to those below an aircraft. This paper explores an alternative approach to TRN that maximizes navigation information through optimal steering of a gimbaled laser. A Cramér‐Rao lower bound analysis as well as a high‐fidelity simulation establishes the utility of optimal steering while employing TRN. This original approach to TRN shows the order of magnitude improvements in navigation performance over existing methods.