This paper analyzes the effects of time delay on the stability of the rotation modes for the magnetically suspended flywheel (MSFW) with strong gyroscopic effects. A multi-input multioutput system is converted into a single-input single-output control system with complex coefficient by variable reconstruction, and the stability equivalence of the systems before and after variable reconstruction is proven. For the rotation modes, the stability limits and corresponding vibration frequencies are found as a function of nondimensional magnetic stiffness and damping and nondimensional parameters of rotor speed and time delay. Additionally, the relationship between cross feedback control system stability and time delay is investigated. And an effective phase compensation method based on cross-channel is further presented. Simulation and experimental results are presented to demonstrate the correctness of the stability analysis method and the superiority of the phase compensation strategy.