Given that on-orbit modulation transfer function (MTF) for space charge coupled device (CCD) camera has the disadvantage of low assessing precision caused by noise in the process of image acquisition, a new high-precision assessment approach of MTF for space CCD camera is proposed. The accurate knife-edge direction is extracted according to the image motion velocity model which is built based on the characteristics of CCD dynamic imaging. The theory model of MTF is corrected when noise is considered. And the line spread function (LSF) is computed based on the parameter transfer function model of CCD camera. The LSF performs the derivative operation and Fourier transform to obtain the MTF. Experimental analysis denotes that the proposed method can efficiently estimate on-orbit MTF. Compared with the traditional knife-edge method, the assessment value of MTF has improvement of 28.71% . The proposed approach can effectively solve the problem of lower precision on-orbit assessment of MTF.