After analyzing a classical Radio Frequency Identification (RFID) indoor positioning system named LANDMARC, an improved RFID indoor positioning algorithm based on reference tags' credibility and deviation correction was proposed to enhance the positioning accuracy. This algorithm introduced reference tags to assist in positioning process. After checking the credibility of all nearest neighbour reference tags, a small number of incredible tags were discarded. Then the system did deviation correction of positioning aiming at these final selected nearest neighbor reference tags. At last, the position of the tag to be positioned was calculated. The experimental results show that, compared with the original LANDMARC, this algorithm improves positioning accuracy and is suitable for the application of indoor objects.