In this paper, performance of the initial fine alignment for the stationary nonleveling strapdown inertial navigation system (SDINS) containing low-grade gyros is analyzed. First, the observability is analyzed by conducting a rank test of an observability matrix and by investigating the normalized error covariance of the extended Kalman filter based on the ten-state model. The results show that the accelerometer biases on horizontal axes are unobservable. Second, the steady-state estimation errors of the state variables are derived using the observability equation. It is verified that the estimates of the state variables have errors due to the unobservable state variables and nonleveling attitude angles of a vehicle containing the SDINS. Especially, this paper shows that the larger the attitude angles of the vehicle are, the greater the estimation errors are. Finally, it is shown that the performance of the eight-state model excluding the two unobservable state variables is better than that of the ten-state model in the fine alignment by a Monte Carlo simulation.