The origin of the Moon's ionosphere has been explored using Chandrayaan‐1 radio occultation (RO) measurements and a photochemical model. The electron density near the Moon's surface, obtained on 31 July 2009 (∼300 cm−3), is compared with results from a model which includes production and recombination of 16 ions, solar wind proton charge exchange, and the electron impact ionization. The model calculations suggest that in the absence of transport, inert ions, namely Ar+, Ne+, and He+, dominate lunar ionosphere (density ∼5 × 104 cm−3). Interaction with solar wind, however, leads to their complete removal (∼2–3 cm−3). Assuming the Moon's exosphere to have CO2, H2O, O, OH, H2, CH4, and CO molecules in addition to the inert gases, the model calculations suggest that the lunar ionosphere is dominated by molecular ions, namely H2O+, CO
2+, and H3O+, with near‐surface density ∼250 cm−3. We surmise that lunar ionosphere can be molecular in nature.