In order to obtain water-vapor profiles in the lower troposphere with a high accuracy and a temporal-spatial resolution, an improved ground-based differential absorption lidar system for water-vapor measurements is demonstrated. The key components of the system and the errors possibly existing in the system are described in detail. A real-time differential absorption cross-section measurement device that can compensate for measuring error caused by laser transmitter is presented. Combined with the water-vapor concentrations of different seasons in Shanghai, the differential optical thickness, the relationship between the gain of avalanche photo-diodes and the signal to noise ratio of received signal, and the statistical error in detection of four absorption lines in the 935 nm H2O absorption band are simulated in detail. The result shows that a particular absorption line can be selected, which depends on season and meteorological condition, to achieve the best outcome. With a time resolution of 5 min and a vertical resolution of 300 m, the statistical error of water vapor concentration is no more than 18% in a range of 300-5000 m.