nertial sensors based on Micro-electro-mechanical systems (MEMS) are leading a great prospect because they are cheap, small and light. However, large errors limit their applications in many Inertial Navigation Systems (INS). To improve accuracy of INS based on MEMS sensors, a systematic error auto-compensation method, Rotation Modulation (RM) is introduced. RM improves navigation performance without involving any other information sources, saving the essential characteristic of self-contain. The RM effects on sensor biases and navigation errors are analyzed. Different RM schemes including elements like number of rotating axis, rotation direction, continuity and speed are discussed. An INS based on MEMS sensors with an appropriate RM scheme is developed. Static and land vehicle tests are conducted, verifying the effectiveness of RM on improving inertial navigation performance. Through introducing RM, attitude accuracy is improved by 5 times, and velocity/position accuracy by nearly 10 times.