Traditionally, airborne time-domain electromagnetic (ATEM) data are inverted to derive the earth model by iteration. However, the data are often highly correlated among channels and consequently cause ill-posed and over-determined problems in the inversion. The correlation complicates the mapping relation between the ATEM data and the earth parameters and thus increases the inversion complexity. To obviate this, we adopt principal component analysis to transform ATEM data into orthogonal principal components (PCs) to reduce the correlations and the data dimensionality and simultaneously suppress the unrelated noise. In this paper, we use an artificial neural network (ANN) to approach the PCs mapping relation with the earth model parameters, avoiding the calculation of Jacobian derivatives. The PC-based ANN algorithm is applied to synthetic data for layered models compared with data-based ANN for airborne time-domain electromagnetic inversion. The results demonstrate the PC-based ANN advantages of simpler network structure, less training steps, and better inversion results over data-based ANN, especially for contaminated data. Furthermore, the PC-based ANN algorithm effectiveness is examined by the inversion of the pseudo 2D model and comparison with data-based ANN and Zhody's methods. The results indicate that PC-based ANN inversion can achieve a better agreement with the true model and also proved that PC-based ANN is feasible to invert large ATEM datasets.