A useful analytic model describing the response of a photon-counting (PC) system has been developed. The model describes the nonlinear count loss and apparent count gain arising from the overlap of photomultiplier tube (PMT) pulses, taking into account the distribution in amplitude of the PMT output pulses and the effect of the pulse-height discrimination threshold. Comparisons between the model and Monte Carlo simulations show excellent agreement. The model has been applied to a PC lidar system with favorable results. Application of the model has permitted us to extend the linear operating range of the PC system and to quantify accurately the response of the system in its nonlinear operating regime, thus increasing the useful dynamic range of the system by 1 order of magnitude.