Distance Measuring Equipment (DME) comprises a ground station (transponder) and an interrogator station, typically installed in an aircraft. The ground station is generally co-located with a VOR station for navigational (and maintenance) efficiency.

The interrogator is tuned to a particular DME frequency to correspond to the desired ground station's receive channel (this frequency will be between 1,025 and 1,150 MHz). When this is done, the interrogator will begin to broadcast pairs of pulses in what is called "search mode." These pulses are just that, pulses of radio signal at a particular time spacing. The transponder will, on receiving these pairs, respond 50 microseconds later (to allow for a standard delay for processing) on a designated frequency, paired with the interrogation frequency, between 962 and 1,216 MHz.

The interrogator determines which response pairs correspond to its interrogation based on time windows and pulse pattern, and then uses the known speed of light to calculate how far from the transponder antenna it is. It will subtract 50 µs from the total (for the transponder delay, divide by 2, and then multiply that time by the speed of light to come up with the distance. It then displays this value (in miles, km, feet or meters) on the front panel in the aircraft. There are a few things to keep in mind when using DME. Most notably, it reports the slant range - that is, the length of the line segment directly from the receiver to the transponder. Thus, it will not report the actual ground distance to the transponder's location. At low altitudes and long distances, the difference is negligible, but at higher altitudes and closer to the transponder, this distance will increasingly differ from the ground range. Think of it as a right triangle, with the aircraft and the transponder at the two distant vertices from the right angle. The right angle represents the aircraft's location on the ground plane, and the hypotenuse the slant range to the station whereas the base of the triangle represents the range over ground.

DMEs also broadcast a constant tone at 1,350 Hz which is modulated to form the Morse code identifier for the station. This can be played as audio on the interrogator, so that pilots can confirm which station they are tuned into.

DMEs are generally located with VORs. However, DMEs can also be placed on airports as part of an instrument approach system. In this case, they are known as Terminal DMEs (TDME) and their 'zero range point' is not the airfield center, but the threshold of the runway of whose approach procedure they are a part.