Obtaining high resolution Digital Elevation Models (DEMs) is a critical task for analysis and visualization in several remote sensing applications. LiDAR technology provides an effective way for obtaining high resolution topographic information. This paper presents a texture-based novel automatic algorithm for DEM generation from LiDAR data. The proposed technique uses multifractal-based textural features for object identification combined with a maximum slope filter. Although this work is concentrated on DEM generation, certain aspects of the algorithm make it suitable for classification of LiDAR data into other types of data. Some experimental results are presented to illustrate the effectiveness of the proposed algorithm.