Magnetic target location method has important application in many fields, such as aerospace magnetic detection, underground mineral detection. Normally, when the distance between the gradiometer and the magnetic target is long enough, the magnetic target can be equivalent to a magnetic dipole. The magnetic field and magnetic field gradient is obtained by using magnetic sensor, and the location result is gotten by an algorithm. The location error mainly including system error and random error is analyzed. The error caused by the baseline distance is analyzed, and the error is corrected by the iterative correction method. For the magnetic dipole with magnetic moment intensity of 2 Am2, the distance error can be reduced to 5% by the iterative correction method with range of 70 cm. A generalized inverse matrix is proposed to eliminate the blind zone caused by the change of magnetic moment direction, and the target can be detected without blind.