The Bluetooth SIG announced support for angle of arrival ( AoA) and angle of departure ( AoD) in the Bluetooth 5. 1 specification, which provides a new solution to greatly improve the precision of Bluetooth positioning. However, the Bluetooth 5. 1 does not provide a unified algorithm for angle calculation. An improved two-dimensional MUSIC algorithm based on rectangular array was proposed to solve the problems of angle calculation caused by serious multipath interference in indoor environment. The antenna array is divided twice, and the covariance matrix of one-dimensional subarray is corrected by the method of forward and backward smoothing, and the covariance matrix of the whole array is corrected by the generalized inverse of the received signals matrix. This algorithm restores the rank of the signals covariance matrix without reducing the dimension of the signals covariance matrix, interference caused by indoor multipath sources can be effectively suppressed. Through the simulation experiment, it is proved that the proposed algorithm can greatly improve the accuracy of angle estimation under the condition of low fast beat number and low SNR. Positioning system is designed for indoor and outdoor experiments. The results show that the improvement of location accuracy is more obvious in indoor location. The circular probability error of stationary location is reduced by 26. 75% ~ 60. 25% in the indoor environment. Simulation and indoor positioning experiments show the effectiveness of the angle estimation algorithm proposed in this paper, this algorithm also has important reference significance for direction of arrival estimation in other application fields.