At first, the basic structure of guidance system was given, and guidance system with proportional navigation law was introduced. Secondly, on the assumption that mechanism of dynamic stabilized gyro was adopted, in order to track target quickly, tracking scheme of laser seeker was set in nonlinear, transition and linear zones, and tracking loop of this seeker was designed with Hermite Method, which smoothened proecessing rate of the seeker. Then according to principle of the laser seeker, there was dead-saturation nonlinearity in the guidance loop. With characteristics of guidance system, describing function method was used to research the stability problem while autopilot was introduced into guidance loop. Analysis shows that nonlinearity has no effect on the phase margin, however, it improves magnitude margin. In addition, the change of root locus with time to go for guidance, and the minimal stability margin is given as another base of stability analysis.