Terrestrial laser scanning (TLS) has been used to extract accurate forest biophysical parameters for inventory purposes. The diameter at breast height (DBH) is a key parameter for individual trees because it has the potential for modeling the height, volume, biomass, and carbon sequestration potential of the tree based on empirical allometric scaling equations. In order to extract the DBH from the single-scan data of TLS automatically and accurately within a certain range, we proposed an adaptive circle-ellipse fitting method based on the point cloud transect. This proposed method can correct the error caused by the simple circle fitting method when a tree is slanted. A slanted tree was detected by the circle-ellipse fitting analysis, then the corresponding slant angle was found based on the ellipse fitting result. With this information, the DBH of the trees could be recalculated based on reslicing the point cloud data at breast height. Artificial stem data simulated by a cylindrical model of leaning trees and the scanning data acquired with the RIEGL VZ-400 were used to test the proposed adaptive fitting method. The results shown that the proposed method can detect the trees and accurately estimate the DBH for leaning trees.