In seismic modeling and in migration it is often desirable to use a wave equation (with varying velocity but constant density) which does not produce interlayer reverberations. The conventional approach has been to use a one-way wave equation which allows energy to propagte in one dominant direction only, typically this direction being upward or downward (Claerbout, 1972). The authors introduce a two-way wave equation which gives highly reduced reflection coefficients for transmission across material boundaries. For homogeneous regions of space, however, this wave equation becomes identical to the full acoustic wave equation. Possible applications of this wave equation for forward modeling and for migration are illustrated with simple models.