In the indoor pseudolite positioning system, the effect of the clock offset always leads to a large error in the positioning result. To reduce the effect of the clock offset, a relative localization algorithm for the indoor environment is proposed. In this paper, firstly, the Kalman positioning algorithm is used to obtain the coarse baseline. The model of the indoor relative localization and its operation are shown. Using the Kalman filter, the pseudorange double difference is smoothed by the carrier phase double difference. Then, the accurate baseline and the accurate positioning result of the receiver could be obtained. In order to predict the next state precisely, the Kalman corrected result is replaced by the accurate result. The experimental results show that the proposed algorithm has a good localization accuracy and the positioning error is less than 20 cm.