The thesis is concerned with multiscale approximation by means of radial basis functions on hierarchically structured spherical grids. A new approach is proposed to construct a biorthogonal system of locally supported zonal functions. By use of this biorthogonal system of locally supported zonal functions, a spherical fast wavelet transform (SFWT) is established. Finally, based on the wavelet analysis, geophysically and geodetically relevant problems involving rotation-invariant pseudodifferential operators are shown to be efficiently and economically solvable.