Environmental matrix S in the guidance instrument systematic error model is usually seriously ill-conditioned and has a strong impact on accuracy of the result of error separation.In this paper,a new algorithm for guidance instrument error separation is presented by analysis of some numerical iterative solutions.The new algorithm converts solving of ill-conditioned algebraic equations to solving of corresponding stiff dynamic system.The convergence and other characteristics of the new method are proved.To verify effectiveness of the method,Primary Bayesian (PB) method is chosen to compare with it.On the condition of error 0.01 m/s,0.02 m/s,and 0.03 m/s,numerical experiments were carried out.The results show that the new method is more effective for guidance instrument error separation.