The exploration of planetary surfaces with unmanned wheeled vehicles will require sophisticated software for guidance, navigation and control. Future missions will be designed to study harsh environments that are characterized by rough terrains and extreme conditions. An accurate knowledge of the trajectory of planetary rovers is fundamental to accomplish the scientific goals of these missions. This paper presents a method to improve rover localization through the processing of wheel odometry (WO) and inertial measurement unit (IMU) data only. By accurately defining the dynamic model of both a rover’s wheels and the terrain, we provide a model-based estimate of the wheel slippage to correct the WO measurements. Numerical simulations are carried out to better understand the evolution of the rover’s trajectory across different terrain types and to determine the benefits of the proposed WO correction method.