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Small drones are being utilized by researchers for applications such as object tracking, imaging and remote sensing as they have become more available, inexpensive and mobile with the advancements in sensor and UAV technologies. They can be equipped with sensors such as cameras and radars. Radars can be used onboard for navigation aid by detecting range and velocity, as well as for radar imaging applications. Although they are used in the latter commonly, radars can be used in navigation aid as well since they are barely affected by weather conditions or smoke. FMCW radars are suitable for drones since they can be lightweight and can detect range and velocity. Therefore, an FMCW radar-equipped drone system is designed and implemented for UAV positioning applications. A postprocessing algorithm is developed for detecting the altitude above ground level as well as the amount of reflection coming from the material on the ground surface, and a range compensation method is proposed to improve the performance of the algorithm. The results of a field experiment showed that the radar system and the postprocessing algorithm can be used for drone-based airborne positioning applications. Altitude values obtained with the radar postprocessing are in agreement with the altitude of the drone. Reflections coming from the metal objects are distinguished from those coming from the ground. With the range compensation method, minimum detectable altitude value is improved and the magnitude of ground reflections obtained from different altitudes became similar. The proposed system and algorithm can be utilized in navigation and in landing aid applications.