The sensitive point of the rotating IMU does not coincide with the origin of the aircraft body coordinate system, there is angular motion in the process of the self-alignment, thus the lever-arm effect error is introduced.In this paper, analysis is made to the influence of rotating inertial navigation inner arm on the self-alignment according to the lever-arm effect error model.In order to solve the problem, a method of arm calibration combined with self-alignment process is proposed.The method does not need additional calibration process, and can be easily implemented in engineering applications.The test results show that:1) The method can accurately calibrate the inner arm of rotating IMU, with the calibration accuracy of 1.1 mm;and 2) After the compensation of the arm, the self-alignment accuracy can be significantly improved, and the azimuth alignment accuracy is improved by 35%.