We researched and designed WSN localization system based on ZigBee. This plan used CC2430/2431 of TI Company as core chip; gateway, reference node and blind node module were designed combined with peripheral components. The hardware principle and software design of the localization system was discussed, and present the principle diagram of system and software design flow chart. IAR Embedded Workbench was used as platform to develop system software. We adopted improved DV-Distance algorithm as location algorithm. What’s more, the improved DV-Distance algorithm was compared with traditional algorithm by simulation, and the results show that improved DV-Distance algorithm could improve location accuracy and efficiency. So the scheme designed is feasible, and it is suitable for practical application.