Indoor localization can provide a number of different services such as location-aware advertisement, indoor navigation and automating different appliances based on the user location. A number of different techniques such as time-difference- of-arrival, angle-of-arrival, time-of-flight, and received signal strength indicator (RSSI) have been used to provide Location Based Services (LBS). RSSI is one of the widely used methods as it is cost efficient and easy to implement. However, RSSI's performance is limited by multipath fading and indoor noise. Particle Filter (PF) is an accurate Bayesian Filtering algorithm that can improve the performance of RSSI-based indoor localization. However, PF is not able to satisfy the high accuracy requirement (possibly 10cm) of indoor localization. In this paper, we present Particle Filter-Extended Kalman Filter (PFEKF) cascaded algorithm that combines PF and EKF in series to reduce the impact of multipath effects and noise on the RSSI. Our experimental results show that PFEKF improves the localization accuracy by 31.3% and 33.9% in 3D and 2D environments respectively when compared with using only a PF.