In this paper, a new inversion method, Adaptive Regularized Inversion Algorithm (ARIA), is presented to overcome the difficulty of the determination for the regularized factor. Firstly, a new data variance disposing method, data variance normalization method, is put forward. This method uses a new way to calculate the influence matrix of data variance in inversion. Thus, the data variance only influences data fitting, and has no influence on the weight between data object function and the model constraint object function. So the influencing factors of the determination of the regularized factor are reduced. Secondly, the definition of the roughness kernel matrix is presented in the course of constructing model constraint object function, and a concise equation of it is derived. Thus the construction of the model object function becomes very simple and direct. Thirdly, two adaptive methods of the regularized factor are put forward based on the relations of data object function, the model constraint object function, and the regularized factor. Finally, ARIA is used to solve an magnetotelluric (MT) one‐dimensional inversion problem by the constraint of the flattest model. Several examples are illustrated to exemplify the effect of ARIA.