Abstract: In order to solve the problems of existing horizontal directional drilling (HDD) guidance methods, including low measurement accuracy, shallow positioning distance, discontinuous measurement data and great interference by magnetic field, a magnetic beacon-based horizontal directional drilling guidance and positioning method was proposed to achieve the position and attitude measurement of HDD. Meanwhile, a measurement array based on the third-order magnetic gradient tensor was designed, which verifies through simulation that the method could eliminate the influence of the geomagnetic fields and achieve the position measurement. In order to improve the attitude measurement accuracy, the multisource data fusion was performed with MEMS sensors, measurement array position information and zero velocity information based on the inertial navigation theory to estimate and correct the attitude errors solved by inertial navigation. Besides, the position measurement algorithm based on the third-order magnetic gradient tensor was verified by ground-based position measurement experiments, with the average relative error of 4.57% in the position measurement results. In addition, the multi-source data fusion algorithm was verified by ground attitude measurement experiments. The results show that the error is within 0.3° for the inclination angle, within 0.7° for the tool face angle, and within 1° for the azimuth angle. This indicates the accuracy and effectiveness of the position measurement algorithm based on the third-order magnetic gradient tensor and the attitude measurement algorithm with multi-source data fusion proposed in this paper. The research results could improve the applicable range, real-time performance and positioning accuracy of trenchless horizontal directional drilling, thereby providing the theoretical basis for the automation of HDD guidance technology.