Fault analysis and application research on abnormal flow characteristics of a counterbalance valve were made, and the abnormal decreased flow characteristics of the counterbalance valve in this circuit was the reason of this problem. It was found that the gap between the valve sleeve and the bottom of the hole was the mainly factor of the decreased flow characteristics by analyzing the working principle of the counterbalance valve. The flow characteristics of the counterbalance valve was back to normal by eliminating the gap. Experimental results and the simulation results of the flow characteristics are basically identical.