Recent studies have demonstrated the usefulness of global positioning system (GPS) receivers for relative positioning of formation-flying satellites using dual-frequency carrier-phase observations. The accurate determination of distances or baselines between satellites flying in formation can provide significant benefits to a wide area of geodetic studies. For spaceborne radar interferometry in particular, such measurements will improve the accuracy of interferometric products such as digital elevation models (DEM) or surface deformation maps. The aim of this study is to analyze the impact of relative position errors on the interferometric baseline performance of multistatic synthetic aperture radar (SAR) satellites flying in such a formation. Based on accuracy results obtained from differential GPS (DGPS) observations between the twin gravity recovery and climate experiment (GRACE) satellites, baseline uncertainties are derived for three interferometric scenarios of a dedicated SAR mission. For cross-track interferometry in a bistatic operational mode, a mean 2D baseline error (1σ) of 1.4 mm is derived, whereas baseline estimates necessary for a monostatic acquisition mode with a 50 km along-track separation reveal a 2D uncertainty of approximately 1.7 mm. Absolute orbit solutions based on reduced dynamic orbit determination techniques using GRACE GPS code and carrier-phase data allows a repeat-pass baseline estimation with an accuracy down to 4 cm (2D 1σ). To assess the accuracy with respect to quality requirements of high-resolution DEMs, topographic height errors are derived from the estimated baseline uncertainties. Taking the monostatic pursuit flight configuration as the worst case for baseline performance, the analysis reveals that the induced low-frequency modulation (height bias) fulfills the relative vertical accuracy requirement (σ<1 m linear point-to-point error) according to the digital terrain elevation data level 3 (DTED-3) specifications for most of the baseline constellations. The use of a GPS-based reduced dynamic orbit determination technique improves the baseline performance for repeat-pass interferometry. The problem of fulfilling the DTED-3 horizontal accuracy requirements is still an issue to be investigated. DGPS can be used as an operational navigation tool for high-precision baseline estimation if a geodetic-grade dual-frequency spaceborne GPS receiver is assumed to be the primary instrument onboard the SAR satellites. The possibility of using only single-frequency receivers, however, requires further research effort.