The invention discloses an on-orbit error separation method of a spacecraft guidance tool. According to the difference between a real-time telemetering speed and an exterior measuring rate of a spacecraft, through combination of a least square method and latent root estimation, an error coefficient of a guidance tool is calibrated on orbit in real time and the guidance tool error is compensated. The method solves the problem that the existing guidance tool error separation method produces mismatching of the positions of the spacecraft in air and ground coordinates of the spacecraft, realizes on-orbit real-time calibration of an error coefficient of the guidance tool, utilizes a simple algorithm and is easy to industrialize. Through combination of the least square method and the latent root estimation, confidence of the error coefficient estimation is improved.