Gaining information about an unknown gas source is a task of great importance with applications in several areas, including responding to gas leaks or suspicious smells, quantifying sources of emissions, or in an emergency response to an industrial accident or act of terrorism. In this paper, a method to estimate the source term of a gaseous release using measurements of concentration obtained from an unmanned aerial vehicle (UAV) is described. The source term parameters estimated include the three‐dimensional location of the release, its emission rate and other important variables needed to forecast the spread of the gas using an atmospheric transport and dispersion model. The parameters of the source are estimated by fusing concentration observations from a gas detector on‐board the aircraft, with meteorological data and an appropriate model of dispersion. Two models are compared in this paper, both derived from analytical solutions to the advection–diffusion equation. Bayes’ theorem, implemented using a sequential Monte Carlo algorithm, is used to estimate the source parameters to take into account the large uncertainties in the observations and formulated models. The system is verified with novel, outdoor, fully automated experiments, where observations from the UAV are used to estimate the parameters of a diffusive source. The estimation performance of the algorithm is assessed subject to various flight path configurations and wind speeds. Observations and lessons learned during these unique experiments are discussed, and areas for future research are identified.