This paper describes the basic principles of DV-Hop algorithm. As for the original DV-Hop algorithm, the number of hops between nodes is too large and some small part of nodes assembled can cause a analogue error, both of which make the positioning accuracy of unknown nodes not high. To overcome these shortcomings, a modified DV-Hop localization algorithm is proposed. The new algorithm modifies the number of hops between nodes by setting the threshold and use the estimate coordinates of beacon nodes and the deviations of actual position as a correction factor to correct positioning results of unknown nodes. It is the proposed algorithm that not only improves the estimation accuracy of jump distance but also reduces the positioning errors and removes the unknown nodes outside the region. The experimental results have shown that the positioning accuracy based on modified algorithm is much better than original one without adding additional hardware, and proved the correctness of the improved algorithm.