The purpose of this paper is to present a method of precise navigation and velocity determination for GRACE formation flying satellites-which integrates the onboard accelerometer data, K-band range measurements and IGS GPS precise ephemeris data into the processing filter to estimate the position and velocity of the formation flying spacecrafts simultaneously. The accuracy of force models acting on satellite can be improved with the onboard accelerometer, and which then increased the accuracy and reliability of orbit determined by the reduced dynamic method. Several corrections have been adopted to increase the precision of GPS un-differenced measurements, which along with the high precision KBR measurements ensured the high precision of orbit determination. The paper established the state function of the formation flying spacecrafts and three types of measurement functions of the orbit filter model. The computation results based on GRACE satellite experiment data shows that the r.m.s of three axis of orbit is better than 20cm and the velocity is on the level of mm/s