Aiming at the cumbersome problem of analyzing the inertial navigation error in the frequency domain, the modulation mechanism of the systematic error and random error of the inertial measurement unit is analyzed based on the inertial differential equation and the error covariance Riccati equation in the time domain. Combined with the characteristics of the RLG dual-axis rotation modulation inertial navigation system, the simulation experiments and actual experiments are designed to verify the theory analysis. The experimental results show that the dual-axis rotational modulation can modulate the influence of systematic errors, but cannot modulate the influence of random errors. The conclusion could guide inertial devices’ selection of long-endurance and high-accuracy dual-axis rotation modulation inertial navigation system.