We propose a distributed least-mean squares (LMS) procedure based on a diffusion strategy for localization and tracking of mobile terminals in cellular networks. In the proposed algorithm, collaborating base stations measure two sets of parameters, namely, the received signal strength (RSS) and the signal propagation time (SPT) to estimate mobile locations. The proposed algorithm has a simple operational structure, offers agile tracking performance and helps the network to save energy and radio resources by benefiting from its decentralized and adaptive signal processing features.