The first wind lidar in space ALADIN will be deployed on ESA´s Aeolus mission and will be operational in 2018. It is not only the first time that the space hardware of a high power UV laser and a Doppler wind lidar was developed, but also the on-ground processors for wind retrieval, calibration and bias correction schemes are novel, i.e. without heritage from earlier space missions. In order to assess the performance of ALADIN and to optimize the wind retrieval and calibration algorithms an end-to-end simulator was developed. This allows realistic simulations of data downlinked by Aeolus. Together with operational processors this setup is used to assess random and systematic error sources and perform sensitivity studies about the influence of atmospheric and instrument parameters. The wind retrieval algorithms up to Level 1 will be introduced as well as the related bias correction schemes for harmonic and range-dependent bias sources. Both Level 1 and 2 wind retrieval algorithms rely on the instrument calibration modes using internal and atmospheric signals in nadir-pointing mode of the satellite. These instrument calibration modes and the relevant correction schemes for atmospheric temperature and pressure influence on wind retrievals from the Rayleigh channel will be discussed.