In recent years there has been growing interest in ad-hoc and wireless sensor networks (WSNs) for a variety of indoor applications. Localization information in these networks is an enabling technology and in some applications it is the main sought after parameter. The cooperative localization performance of WSNs is ultimately constrained by the behavior of the utilized ranging technology in dense cluttered indoor environments. Recently, ultra-wideband (UWB) Time-of-Arrival (TOA) based ranging has exhibited potential due to its large bandwidth and high time resolution. However, the performance of its ranging and cooperative localization capabilities in dense indoor multipath environments needs to be further investigated. Of main concern is the high probability of non-line of sight (NLOS) and Direct Path (DP) blockage between sensor nodes, which biases the TOA estimation and degrades the localization performance. In this dissertation, we first present the results of measurement and modeling of UWB TOA-based ranging in different indoor multipath environments. We provide detailed characterization of the spatial behavior of ranging, where we focus on the statistics of the ranging error in the presence and absence of the DP and evaluate the pathloss behavior in the former case which is important for indoor geolocation coverage characterization. Parameters of the ranging error probability distributions and pathloss models are provided for different environments: traditional office, modern office, residential and manufacturing floor; and different ranging scenarios: indoor-to-indoor (ITI), outdoor-to-indoor (OTI) and roof-to-indoor (RTI). Based on the developed empirical models of UWB TOA-based OTI and ITI ranging, we derive and analyze cooperative localization bounds for WSNs in the different indoor multipath environments. First, we highlight the need for cooperative localization in indoor applications. Then we provide comprehensive analysis of the factors affecting localization accuracy such as network and ranging model parameters. Finally we introduce a novel distributed cooperative localization algorithm for indoor WSNs. The Cooperative LOcalization with Quality of estimation (CLOQ) algorithm integrates and disseminates the quality of the TOA ranging and position information in order to improve the localization performance for the entire WSN. The algorithm has the ability to reduce the effects of the cluttered indoor environments by identifying and mitigating the associated ranging errors. In addition the information regarding the integrity of the position estimate is further incorporated in the iterative distributed localization process which further reduces error escalation in the network. The simulation results of CLOQ algorithm are then compared against the derived G-CRLB, which shows substantial improvements in the localization performance.