Interferometric synthetic aperture radar (InSAR) technique is widely used for DEM generation and regeneration. Phase unwrapping is one of the most crucial operation in DEM generation through InSAR process. Difficulty in phase unwrapping arises due to the phase error in the interferogram, derived from interferometric pairs. This phase error can occurs due to various factors like system noise, decorrelation for non-simultaneous image acquisitions, image misregistration, geometric decorrelation and atmospheric phase screen (APS) difference between acquired InSAR pairs. In this paper, we present an improved phase unwrapping approach which reduces the phase errors introduced due to decorrelation. Phase errors are reduced by using simulated phase. Simulated phase generated through orbit model of InSAR pair in slant range plane, by using external coarse DEM. Branch-cut and least-square algorithms are used for phase unwrapping in the process of DEM generation. A comparative analysis on the results of both the algorithms is also presented. Results of both phase unwrapping algorithms of direct and blending of simulated phase are compared. Our procedure improves the phase unwrapping significantly that gives improved DEM.