The self-adaptively iterative damping least square method is proposed in this paper by combining equal thinner layers and weighting matrix. The new efficient algorithm can overcome such serious shortcomings existent in the classic least square method as the strict dependence on initial model, the remarkable man-made error, low accuracy, and the bad convergence velocity, which have a great adverse effect on the inversion of dispersion curves of Rayleigh wave. The inversion results of the new theoretical model and field dispersion data indicate that this inversion is characterized by good stability, high accuracy and strong resolution, and can automatically inverse shear velocity and thickness.