This paper describes the characteristics of the first distributed observatory that is being designed, constructed, and installed in South America to study the low-latitude ionosphere and upper atmosphere. The LISN distributed observatory is comprised of two main parts: (a) a set of three complementary instruments and (b) a fine-tuned assimilation technique. The initial LISN instruments will consists of 70 GPS receivers, 5 sounders and no less than 6 magnetometers. All these instruments will be placed in South America west of the 55° W meridian. We have purchased Novatel GSV4004B GPS receivers due to their ability to calculate amplitude and phase scintillations at 50 Hz. These receivers conduct precise measurements of TEC using an ovenized oscillator for stability and collect signals from the SBAS satellites. The latter property is not common even for state-of-the-art GPS receivers but opens the possibility to conduct other types of observations and campaigns that we are planning to carry out. One of these campaigns consist of using 2 GPS receivers spaced by 50-100 km in the east west direction and calculating the difference TEC between both locations. This value will be proportional to any spatial variability in TEC due to TIDs. The LISN project has also provided financial support for the design, construction, and testing of a prototype magnetometer at the Jicamarca radio observatory. The new magnetometer is presently operating at Jicamarca and is proving to be very precise, extremely reliable and certainly more economical than other magnetometers that are available in the US and Europe. Four other LISN magnetometers are being constructed and will be deployed between March and December 2007. The five LISN sounders use the versatile radar hardware developed by Scion Associated that has been built around digital receivers, microprocessors and USB ports. This new sounder will make it possible to employ altitude-dependent phase coding, conduct oblique sounding with new receivers or between the LISN sounders, and vary the number and configuration of the receiving antennas. It is expected that between July and December 2007, two LISN sounders will be installed. One will be placed at El Leoncito, Argentina (S31° 47.569, W69° 17.005), and the other at Puerto Maldonado, Peru (S12° 35.16, W69° 11.15). The 3 LISN basic instruments complement each other and jointly provide a multi-dimensional view of the low-latitude space weather in South America. We also describe the assimilation methods that will be used to ingest the instrumental observables and define atmospheric and ionospheric state parameters. It is expected that the distributed observatory will provide new, time continuous, and spatially extended observations of the background ionosphere, its motion, and the embedded structures. The assimilation algorithms will combine the multi-instrument multi-point observations of LISN with physics-based models of the ionosphere and electrodynamics to perform a statistical inversion of the data to produce an optimal representation of the ionosphere, the electrodynamics, and its drivers. The main parameters to be determined are: (a) the number density as a function of latitude, longitude and height, a 2D map of ionospheric conductivities, and (b) the plasma vertical drift and meridional wind as a function of altitude and longitude. The LISN assimilation method will also utilize Jicamarca incoherent scatter radar data and Fabry-Perot interferometer neutral wind observations within the LISN region to calibrate and verify the data-model statistical inversion results. Data provided by the Jicamarca IS radar will be used to validate results, but also its data will be later assimilated. It is expected that several science efforts, such as studies of the low-latitude electrodynamics, space weather-related onset of equatorial spread F, and transit of atmospheric gravity waves throughout the LISN field of view will be invigorated by the availability of a new data set that will contain unique time continuity and unprecedented spatial coverage.