Large-scale laser gyroscopes have found important applications in Earth sciences due to their self-sufficient property of measurement of the Earth’s rotation without any external references. In order to extend the relative rotation measurement accuracy to a better level so that it can be used for the determination of the Earth orientation parameters (EOP), we investigate the limitations in a passive resonant laser gyroscope (PRG) developed at Huazhong University of Science and Technology (HUST) to pave the way for future development. We identify the noise sources from the derived noise transfer function of the PRG. In the frequency range below 10−2Hz, the contribution of free-spectral-range (FSR) variation is the dominant limitation, which comes from the drift of the ring cavity length. In the 10−2 to 103Hz frequency range, the limitation is due to the noises of the frequency discrimination system, which mainly comes from the residual amplitude modulation (RAM) in the frequency range below 2 Hz. In addition, the noise contributed by the Mach–Zehnder-type beam combiner is also noticeable in the 0.01 to 2 Hz frequency range. Finally, possible schemes for future improvement are also discussed.