A novel method for microwave imaging of lossless two-dimensional dielectric targets buried in layered media using time-domain scattering data with or without the effect of random noise is presented in this paper. It is an iterative method derived using volume equivalence principle, variation principle, Fourier transform. We name it as time-domain variational iterative method (TVIM). In each iteration, both the direct and inverse problems are solved once. The direct problem is solved by finite-difference time domain (FDTD) method and the inverse problem is solved iteratively. Numerical results show that TVIM performs much better than our former method. Those factors which make TVIM perform better are also investigated.