Relying on the background of constructing digital workshop, an improved RSSI (Received Signal Strength Indicator) location algorithm is introduced in this paper. At first, the application requirements of RSSI location algorithm are discussed from cargo tracking, instrument management and automatic guided vehicles three aspects; and then focuses on the improvements of the new RSSI location algorithm. The test results and analysis show that the positioning accuracy up to 0.89 meter by applying the new algorithm, and it can meet positioning requirements of digital workshop.