An innovative orbit determination method which makes use of gravity gradients for Low-Earth-Orbit satellites is proposed. The measurement principle of gravity gradiometry is briefly reviewed and the sources of error are analyzed. An adaptive hybrid least squares batch filter based on linearization of the orbital equation and unscented transformation of the measurement equation is developed to estimate the orbital states and the measurement biases. The algorithm is tested with real flight data from the European Space Agency’s Gravity field and steady-state Ocean Circulation Explorer (GOCE). The orbit determination results are compared with the GPS derived orbits. The radial and cross-track position errors are on the order of tens of meters, whereas the along-track position error is over one order of magnitude larger. The gravity gradient based orbit determination method is promising for potential use in GPS-denied navigation and in outer space planetary exploration.