The subsurface shear-wave velocity (Vs) is considered to be a key parameter for site characterization and assessment of earthquake hazard because of its great influence on local ground-motion amplification. Array microtremor measurements are widely used for the estimation of shear-wave velocities. Compared to other methods such as frequency-wavenumber (f-k) methods, the spatial autocorrelation (SPAC) method requires fewer sensors and thus is relatively easier to implement and gives robust estimations of shear-wave velocity profiles for depths down to a few hundred meters. The quantity derived from observed data is the SPAC coefficient, which is a function of correlation distance, frequency and phase velocity. Generally, estimation of Vs profiles is a two stage process: Estimation of the dispersion data from the SPAC coefficients and inversion of the dispersion data for shear-wave velocity structure. In this study, instead of inverting dispersion curves, a more practical approach is used; that is, observed SPAC coefficients are directly inverted for the S-wave velocities. A synthetic case and a field data application are presented to test the potential of the inversion algorithm. We obtain an iterative damped least-squares solution with differential smoothing. The differential smoothing approach constrains the change in shear-wave velocities of the adjacent layers and thus stabilizes the inversion.