Capsule endoscopy is a new examination method of gastrointestinal tract. The tracking and localization technique of capsule endoscopy still have the problems of poor dynamic accuracy and tracking failure under magnetic disturbance. This paper proposes a magnetic localization method based on particle filter (PF). Compared with traditional localization method, the proposed PF method can effectively avoid the poor accuracy in the dynamic tracking, and overcome high sensitivity to magnetic disturbance generated by the ferromagnetic materials or surrounding electrical currents. The estimation of the target movement and the estimation of the magnetic disturbance are added in the designed PF algorithm. The estimation of the target movement is applied to compensate measured value of magnetic field when the measurement under time sequence sampling isn′t real time. The estimation of the magnetic disturbance can compensate the magnetic disturbance. The experimental results show that, under limited magnetic disturbance (＜1.5 μT), traditional localization method cannot work. For the dynamic localization, the averaged error of the proposed method is less than 6 mm, which meets the requirements of the clinical application.