This paper addresses a two‐dimensional (2‐D) direction of arrival (DOA) estimation of coherent signals problem. To do so, we first reconstruct a covariance‐like matrix, and then apply forward and backward spatial smoothing (FBSS) method as a preprocessor to remedy the rank deficiency problem. By utilizing the covariance‐like matrix instead of outputs sensors in the FBSS method, the noise and small fading factor influences are reduced in the DOA estimation problem. Afterward, two matrix pencil pairs are exploited to extract 2‐D DOA of impinging signals. This two matrix pencil pairs method can estimate 2‐D DOA with repeated eigenvalues efficiently and also pair the estimated parameters automatically. The proposed algorithm not only has all the privileges of the estimation of signal parameters via rotational invariant techniques (ESPRIT)‐like algorithm but also increases the array aperture. By mathematical tractability, we derive Cramer‐Rao bounds for azimuth and elevation angles for coherent signals received by uniform rectangular array to compare the performance of the estimation algorithms with a lower bound. Simulation results show that the proposed algorithm outperforms the symmetric configuration of uniform rectangular array (SC‐URA), the FBSS–multiple‐signal classification (FBSS‐MUSIC) and the ESPRIT‐like algorithms in terms of root mean squared error (RMSE).