A method for correcting position error in a navigation system enables one to more accurately match a position measurement of a moving object on a digital map. Particularly, the method comprises the steps of: receiving a current position measurement of a moving object from GPS/DR (Dead Reckoning)-based information; correcting the current location measurement using a displacement-corrected value; performing map matching using the corrected current position measurement; calculating variation of correction angle by extracting a current correction angle out of the map matching result; converting and correcting a previous displacement-corrected value to the current correction angle; and compensating the displacement-corrected value by applying a predetermined constant to the converted displacement-corrected value, and storing the compensated displacement-corrected value.