A method for fusing synthetic aperture radar (SAR) images with optical aerial images is presented. This is done in a navigation framework, in which the absolute position and orientation of the flying platform, as computed from the inertial navigation system, is corrected based on the aerial image coordinates taken as ground truth. The method is suitable for new low-price SAR systems for small unmanned vehicles. The primary application is surveillance, and to some extent it can be applied to remote sensing, where the SAR image provides complementary information by revealing reflectivity to microwave frequencies. The method is based on first applying an edge detection algorithm to the images and then optimising the most important navigation states by matching the two binary images. To get a measure of the estimation uncertainty, we embed the optimisation in a least squares framework, in which an explicit method to estimate the (relative) size of the errors is presented. The performance is demonstrated on real SAR and aerial images, leading to an error of only a few pixels (around 4 m in our case), which is a quite satisfactory performance for applications like surveillance and navigation.