In order to improve the positioning accuracy of traditional terrain matching algorithm, a new aircraft terrain matching algorithm based on particle swarm optimization was put forward. The search scope of true location was programmed by taking the measured position of referenced navigation system as the center, terrain elevation data was extracted from the referenced topographic map, then the particle swarm optimization algorithm was introduced into the matching area for searching, and the parameter of pixel height of the terrain profile was used as the particle in particle swarm. On this basis of above, correlation function of normalized product was applied as fitness function of particle, then the degree of similarity of the referenced map with profile of real-time image was compared by maximum fitness value, finally through the simulation analysis, comparison of matching accuracy and time based on TERCOM algorithm and PSO algorithm was presented. Simulation results show that the effect of matching based on PSO algorithm is better than traditional TERCOM algorithm, and matching time is slightly longer than TERCOM, but meet the real-time requirement.