This work addresses the relevant errors of the anisotropic magnetoresistance sensor for inertial navigation systems. The manuscript provides resulting guidelines and solution for using the AMR sensors in a robust and appropriate way relative to the applications. New methods also are proposed to improve the performance and, reduce the power requirements and cost design of the magnetometer. The new compensation method is proposed by developing an optimization algorithm. The necessity of the sensor calibration is shown and the source of the errors and compensating model are investigated. Two novel methods of indoor calibration are proposed and examples of operating systems are presented.