This paper proposes and analyses an improved direction finding (DF) method that uses a rotating interferometer. The minimum sampling frequency is deduced in order to eliminate the phase ambiguity associated with a long baseline, the influence of phase imbalance of receiver is quantitatively discussed and the Root Mean Square Error (RMSE) of both bearing angle and pitch angle are also demonstrated. The theoretical analysis of the rotating interferometer is verified by simulation results, which show that it achieves better RMSE performance than the conventional method.