A system and method for calibrating the bias and scale factors of a heading rate sensor, such as a yaw-rate sensor, using GPS signals. The system receives wheel speed or rotation signals, a vehicle odometer reading, GPS signals and yaw-rate signals. The system includes a wheel-slip detection processor that determines whether there is wheel-slip based on the wheel speed signals and the GPS signals. The system also includes a wheel-based acceleration processor that estimates vehicle acceleration. The system also includes a differential odometry processor that determines vehicle heading based on wheel speed. The system also includes a GPS reference data validation processor that determines whether the GPS signals are valid using the estimated vehicle acceleration and wheel speeds. The valid GPS signals are then used to calibrate the yaw-rate sensor signals, which can be used for vehicle heading purposes.