Hirshfeld atom refinement (HAR) is a method which determines structural parameters from single-crystal X-ray diffraction data by using an aspherical atom partitioning of tailor-made ab initio quantum mechanical molecular electron densities without any further approximation. Here the original HAR method is extended by implementing an iterative procedure of successive cycles of electron density calculations, Hirshfeld atom scattering factor calculations and structural least-squares refinements, repeated until convergence. The importance of this iterative procedure is illustrated via the example of crystalline ammonia. The new HAR method is then applied to X-ray diffraction data of the dipeptide Gly–L-Ala measured at 12, 50, 100, 150, 220 and 295 K, using Hartree–Fock and BLYP density functional theory electron densities and three different basis sets. All positions and anisotropic displacement parameters (ADPs) are freely refined without constraints or restraints – even those for hydrogen atoms. The results are systematically compared with those from neutron diffraction experiments at the temperatures 12, 50, 150 and 295 K. Although non-hydrogen-atom ADPs differ by up to three combined standard uncertainties (csu's), all other structural parameters agree within less than 2 csu's. Using our best calculations (BLYP/cc-pVTZ, recommended for organic molecules), the accuracy of determining bond lengths involving hydrogen atoms from HAR is better than 0.009 Å for temperatures of 150 K or below; for hydrogen-atom ADPs it is better than 0.006 Å2 as judged from the mean absolute X-ray minus neutron differences. These results are among the best ever obtained. Remarkably, the precision of determining bond lengths and ADPs for the hydrogen atoms from the HAR procedure is comparable with that from the neutron measurements – an outcome which is obtained with a routinely achievable resolution of the X-ray data of 0.65 Å.