A methodology for both accurate and smooth contour line generation from Light Detection and Ranging (LiDAR) point clouds is proposed in this paper. In order to improve the accuracy of contour lines in the area of forests, constrained triangulation networks with break lines are then constructed to generate contour lines. In break line extraction, a bi-threshold method for edge line detection is used to extract both complete and reliable break lines. A point clouds elevation adjustment with constrain of break lines and an interpolator considering a contour interval is proposed to improve the smoothness of contour lines. The proposed interpotator is also can avoid contour line intersection when contour lines are interpolated. Statistical parameters and shape index are then used to evaluate quantitatively the accuracy and smoothness of the resultant contour lines, which fill in the blank of contour lines evaluation in theory. The experiments show that high-quality contours in terms of smoothness and accuracy can be generated from LiDAR point clouds.