Time delay is a critical and unavoidable problem in real-time hybrid simulation. An accurate and effective compensation method for time delay is necessary for the safety of real-time hybrid simulation and the reliability of test results. Generally, a model-based compensation method can be adopted, which is derived from the identified transfer function by assuming the latter can accurately represent the real plant. However, there must be some differences between the transfer function and the real plant. To facilitate the development of real-time hybrid simulation, we proposed a two-stage feedforward compensation method considering the error between the transfer function identified and the real plant. The compensation strategy proposed in this study was not only based on the transfer function but also introduced an error model as a second-stage compensation into a compensator to realize the synchronization of command and measurement. To verify the efficiency of the proposed method, comparisons in time domain and frequency domain with the feedforward compensator in a model-based feedforward–feedback control method were carried out. Compared with the feedforward compensator, the two-stage method achieved better tracking performance, especially in the high-frequency bandwidth. The test results verified that for a band-limited white noise of 0–30 Hz, the phase lag of the actuation system can be limited to ±5°. Finally, the two-stage method was applied to a real-time hybrid simulation of a two-story frame to illustrate its compensation effect on time delay.