The IF simulator is an important equipment to test and calibrate spaceborne radar altimeter before launch. In this paper, a new IF simulation algorithm (IFSA) is introduced, based on which an IF simulator is developed successfully. The IF simulator is designed to provide simulated I/Q signals and related interface, so that the tracker of altimeter can be tested and calibrated in close-loop under the simulated circumstance. That means the IF simulator should have the ability to simulate the variety of the distance from the satellite to the sea surface, the significant wave height (SWH), the backscatter coefficient of the sea surface, the sea scattering noise, and the thermal noise of the radar altimeter electronic system. Besides IF simulation, IFSA can be used in RF simulator, and it has been proved to be correct and useful by lots of experiments. The IF simulator includes the monitor unit, the data processing unit, timing unit, D/A unit, buffer unit, and interface unit.