In the paper, the observability of the error states of the laser gyro strap down inertial navigation system (SINS) in the condition of the outer field is studied. The dynamic equations for the errors are proposed and the observability of the 15 error states (velocity errors, position errors, bias errors of the inertial instruments) of the system is analyzed. The convergence rate of the states is also discussed. It is analyzed that the estimated accuracy of the bias errors are influenced by the initial attitude errors. In order to estimate the bias errors, the system should be set on at least three different positions. The analysis results are tested by simulations.