This paper proposes a new 2D directionfinding algorithm using vector hydrophone array. A vector hydrophone comprises of two or three velocity hydrophones plus an optional pressure hydrophone, all spatially co-located in a point-like geometry. The velocity hydrophones are identical but orthogonally oriented, measuring one Cartesian component of the incident sonar wavefield's velocity-vector. The pressure hydrophone measuresthe acoustic pressure in the wavefield. The proposed algorithm realizes the 2D direction estimation via two steps.In the first step, a pressure-particle-velocity field vectorsmoothing root-MUSIC algorithm is presented to estimatesources' elevation angles. In the second step, the estimatedelevation angles are applied to extract the direction cosinesand then to estimate sources' azimuth angles. Comparedwith most of the previous algorithms, the proposed algorithm offers advantages as: (1) uses the pressure-particlevelocity field vector sensor smoothing, which enables to offer more accurate elevation angles' estimates for correlatedsources, without losing of array aperture; (2) requires nospectral searching and direction cosine pairing-match procedures. Monte-Carlo simulations are presented to verifythe proposed algorithm's effectiveness.