Dynamics characteristic of photoelectric tracking system with horizontal gimbal is analyzed by momentum theorem and angular momentum theorem and nonlinear model is built.Nonlinear model built is simulated with virtual prototype technology.Analysis and simulation prove that disturbing moment induced by nonlinear relation affects seriously tracking precision when azimuth-axis and elevation-axis move on high angular rate or high angular acceleration,and moving coincidence between azimuth-axis and elevation-axis can be resolved completely when elevation-axis has the same moment of inertia relative to inertia principal axis of elevation-axis.