In order to solve the problems of low positioning accuracy and poor stability of indoor electric power tools positioning technology in practical applications, this paper proposes a spatial positioning algorithm based on active Radio Frequency Identification (RFID). The algorithm first uses the Received Signal Strength Indicator (RSSI) ranging model to convert the signal strength of the target position to the distance from the target position to the locator, then obtains more accurate position information through the multilateral positioning model, and finally reduces the positioning error through the least squares estimation algorithm. In addition, a localization software system is designed for the algorithm, which displays the target's position and detailed coordinate information on top of the system interface, providing an intuitive display for indoor localization. The experimental results show that the algorithm can meet the basic needs of indoor positioning of electric apparatus, and the designed positioning software system can accurately display the position coordinates of electric apparatus.