Research the control algorithm that made highspeed onoff valve to replace servo valve in order to realize the digital control of hydraulic automatic gain control (AGC) system. The threestep elimination zero algorithm was presented, which was based on combining ideas of compensating lag time pulse width modulation (PWM) control and BangBang control. For all displacement adjustment amounts, the highspeed onoff valve only was needed to switch three times to eliminate its zero dead zone, and achieved the purpose of controlling position quickly and accurately. The switch for three times of highspeed onoff valve was shown by six kinds of circumstances. The simulation model was created in AMESim software when the cylinder had downward movement. And the response curve of the speed and displacement was analyzed with simulation in six kinds of circumstances. The theoretical and simulation analysis results show that when the initial displacement is more than 16 μm, the hydraulic AGC system controlled by this algorithm can realize its digital control. When the cylinder had upward movement and downward movement, the error can be limited within 12~12 μm and -4~4 μm respectively.