The error autocompensation technique based on rotation-modulation is an effective method to improve the navigation accuracy of ring laser strapdown inertial navigation system. The error compensation method of ring laser gyroscope (RLG) in rotation-modulated strapdown inertial navigation system (RMSINS) is studied. The error propagation equations of RLG in RMSINS are built, then the rotating error effect and the error propagation characteristics are analyzed through modeling. Based on this, the object function of modulation schemes is deduced and the modulation scheme under Indexing is arranged effectively. Then an improved sixteen-sequence two-axis indexing scheme is proposed to compensate the RLG′s constant drift error, scale factor error, fixing error, and the position error produced by speed error accumulating based on the dynamic error function of two-axis rotating speed. The simulation results show the effectiveness which lays a sound foundation for actual application of RMSINS.