Terrestrial laser scanning (TLS) is a promising tool for estimating leaf area index (LAI). However, very few studies have considered the effect of clumping index Ω in the calculation of “true” LAI. In this study, we developed a new point cloud slicing method based on different incident zenith angles θ and retrieved the gap fraction using multiple-return information to obtain more accurate “true” LAI estimations. In addition, we described a new Ω retrieval method based on the gap size analysis theory to correct the effect of foliage occlusion. Ground validation data were collected by destructively sampling 35 trees and measuring all their leaves. Results show that the TLS-based “true” LAI estimations based on a single TLS scan are strongly correlated with the destructively sampled LAI measurements (R² = 0.76, RMSE = 0.47). Moreover, our Ω retrieval method can effectively correct the effect of foliage occlusion. Other factors, such as the slicing resolution, percentage of laser beams with multiple returns, and scanning distance, have little effect on the final LAI estimation.