Accurate estimates of tree and forest biomass are essential for a wide range of applications. Automated treetop detection and tree crown discrimination using LiDAR data can greatly facilitate forest biomass estimation. Previous work has focused on homogenous or single-species forests, while few studies have focused on mixed forests. In this study, a new method for treetop detection is proposed in which the treetop is the cluster center of selected points rather than the highest point. Based on treetop detection, tree crowns are discriminated through comparison of three-dimensional shape signatures. The methods are first tested using simulated LiDAR point clouds for trees, and then applied to real LiDAR data from the Soquel Demonstration State Forest, California, USA. Results from both simulated and real LiDAR data show that the proposed method has great potential for effective detection of treetops and discrimination of tree crowns.