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The TerraSAR-X add-on for Digital Elevation Measurements (TanDEM-X) bistatic system provides high-resolution and high-quality interferometric data for global topographic measurement. Since the twin TanDEM-X satellites fly in a close helix formation, they can acquire approximately simultaneous synthetic aperture radar (SAR) images, so that temporal decorrelation and atmospheric delay can be ignored. Consequently, the orbital error becomes the most significant error limiting high-resolution SAR interferometry (InSAR) applications, such as the high-precision digital elevation model (DEM) reconstruction, subway and highway deformation monitoring, landslide monitoring and sub-canopy topography inversion. For rugged mountainous areas, in particular, it is difficult to estimate and correct the orbital phase error in TanDEM-X bistatic InSAR. Based on the rigorous InSAR geometric relationship, the orbital phase error can be attributed to the baseline errors (BEs) after fixing the positions of the master SAR sensor and the targets on the ground surface. For the constraint of the targets at a study scene, the freely released TanDEM-X DEM can be used, due to its consistency with the TanDEM-X bistatic InSAR-measured height. As a result, a parameterized model for the orbital phase error estimation is proposed in this paper. In high-resolution and high-precision TanDEM-X bistatic InSAR processing, due to the limited precision of the navigation systems and the uneven baseline changes caused by the helix formation, the BEs are time-varying in most cases. The parameterized model is thus built and estimated along each range line. To validate the proposed method, two mountainous test sites located in China (i.e., Fuping in Shanxi province and Hetang in Hunan province) were selected. The obtained results show that the orbital phase errors of the bistatic interferograms over the two test sites are well estimated. Compared with the widely applied polynomial model, the residual phase corrected by the proposed method contains little undesirable topography-dependent phase error, and avoids unexpected height errors ranging about from −6 m to 3 m for the Fuping test site and from −10 m to 8 m for the Hetang test site. Furthermore, some fine details, such as ridges and valleys, can be clearly identified after the correction. In addition, the two components of the orbital phase error, i.e., the residual flat-earth phase error and the topographic phase error caused by orbital error, are separated and quantified based on the parameterized expression. These demonstrate that the proposed method can be used to accurately estimate and mitigate the orbital phase error in TanDEM-X bistatic InSAR data, which increases the feasibility of reconstructing high-resolution and high-precision DEM. The rigorous geometric constraint, the refinement of the initial baseline parameters, and the assessment for height errors based on the estimated BEs are investigated in the discussion section of this paper. [ABSTRACT FROM AUTHOR]