Abstract: Assessment of cortical bone thickness is important from a medical point of view because bone-layer thickness has a diagnostic value. The thinning of the cortical bone layer reduces the mechanical strength of the bone and exposes it to an increased risk of osteoporotic fractures [1]. The hip bone (proximal femur) is the most critical fracture site. The thickness of the cortical layer in the proximal femur is often too thin to be detected from ultrasonic echoes using traditional peak detection methods (for example the envelope method). In such a case the cepstrum analysis technique may be very useful. In this study the cepstrum method was applied to analyze numerically simulated echoes reflected from the layer and to determine layer thickness. In simulation, the transducer operated at 1 MHz and pulses of a 1.5 micro s duration were assumed. The thickness of the thinnest layer for which the applied cepstrum analysis gave, the correct result equaled 1 mm, which was 0.25 lambda (lambda - wavelength of an ultrasonic wave). That value of the d/lambda ratio is sufficient for future measurements performed in-vivo conditions.