Current flight reference systems are vulnerable to GPS jamming and also lack the accuracy required to test new systems. Pseudolites can augment flight reference systems by improving accuracy, especially in the presence of GPS jamming. This thesis evaluates a pseudolite-based flight reference system which applies and adapts carrier-phase differential GPS techniques. The algorithm developed in this thesis utilizes an extended Kalman filter along with carrier-phase ambiguity resolution techniques.A simulation of the pseudolite-based positioning system realistically models measurement noise, multipath, pseudolite position errors, and tropospheric delay. A comparative evaluation of the algorithms performance for single and widelane frequency measurements is conducted in addition to a sensitivity analysis for each measurement error source, in order to determine design tradeoffs. Other analyses included the use of optimal smoothing, non-linear filtering techniques, and code averaging. Specific emphasis is given to two alternate methods, both developed in this research, for handling the residual tropospheric error after applying a standard tropospheric model.Results indicate that the algorithm is capable of accurately resolving the pseudolite carrier-phase ambiguities, and providing a highly accurate (centimeter-level) navigation solution. The filter enhancements, particularly the optimal smoother and tropospheric error reduction methods, improved filter performance significantly.