This paper addresses the source location problem by using time-difference-of-arrival (TDOA) measurements. The two-stage weighted least squares (TWLS) algorithm has been widely used in the TDOA location. However, the estimation accuracy of the source location is poor and the bias is significant when the measurement noise is large. Owing to the nonlinear nature of the system model, we reformulate the localization problem as a constrained weighted least squares problem and derive the theoretical bias of the source location estimate from the maximum-likelihood (ML) estimation. To reduce the location bias and improve location accuracy, a novel bias-reduced method is developed based on an iterative constrained weighted least squares algorithm. The new method imposes a set of linear equality constraints instead of the quadratic constraints to suppress the bias. Numerical simulations demonstrate the significant performance improvement of the proposed method over the traditional methods. The bias is reduced significantly and the Cramer-Rao lower bound accuracy can also be achieved.