Abstract: To solve the magnetic compass interference problem caused by the dynamic interference magnetic field in urban traffic environment, the feature of the dynamic magnetic interference was analyzed. And the concept of the differential magnetic compasses(DMC) was proposed. An integrated heading system module based on the DMC and the rate gyroscope was designed. The dynamic interference recognition technology of DMC based on the judgment of the threshold value was investigated. The agreement of the theoretical analysis with the real navigation experimental results shows that the DMC can recognize the dynamic magnetic interferences better, compared with single compass. The application range of the magnetic compass in the urban traffic environment is extended. The robust and the precision of the integrated heading system are also improved.