Abstract: This paper deals with the principles, error model and simulation results of an inertial navigation system with singleaxile-stabilization. The error propagation characteristic is obtained by means of covariance analysis based on the developed error model. A series iteration technique is adopted for computation. An assumed tractory of & short-range missile is used for simulating the error covariance propagation.The principle of operation of the present system is simpler than that of a pure strap-down system and lessens the requirements of the gyro dynamic range. As a result, it is possible to utilize a cheap gyro instead of an expensive one in the execution of the same navigation and guidance missions.