A control algorithm based on disturbance estimation and compensation theory was proposed in order to meet the design requirement of apparent axis velocity stationary-error in advanced airborne target indication equipment. An improved extended state observer (ESO) was designed to reduce the phase delay of the high order observer and to improve the control accuracy of the line of sight (LOS). The step response and velocity stability capability of the improved control algorithm were tested in the experiment, and were compared with the classical control algorithm. By analyzing the step experiment results, it can be seen that the designed control algorithm can achieve shorter stability time and lower overshoot under different closed-loop control bandwidth. Under the closed-loop bandwidth of 35 Hz, the stability time of PID algorithm was reduced by 49.1% and the overshoot was reduced by 88.4%, and the dynamic performance of the system was significantly improved. The velocity stability experimental results show that the designed control algorithm can significantly improve the rejection capability of different disturbances of amplitude of 1° and frequency within 2.5 Hz, the velocity error of the LOS was controlled within 0.1(°)/s, and the disturbance residuals were less than 0.1(°)/s. The designed control algorithm meets the design requirements of advanced target indication equipment and has high practical value for improving the dynamic performance of the system and the velocity stability of the LOS.