An integrated navigation method based on the inertial navigational system (INS) and Lidar was proposed for land navigation. Compared with the traditional integrated navigational method and dead reckoning (DR) method, the influence of the inertial measurement unit (IMU) scale factor and misalignment was considered in the new method. First, the influence of the IMU scale factor and misalignment on navigation accuracy was analyzed. Based on the analysis, the integrated system error model of INS and Lidar was established, in which the IMU scale factor and misalignment error states were included. Then the observability of IMU error states was analyzed. According to the results of the observability analysis, the integrated system was optimized. Finally, numerical simulation and a vehicle test were carried out to validate the availability and utility of the proposed INS/Lidar integrated navigational method. Compared with the test result of a traditional integrated navigation method and DR method, the proposed integrated navigational method could result in a higher navigation precision. Consequently, the IMU scale factor and misalignment error were effectively compensated by the proposed method and the new integrated navigational method is valid.