Abstract: An improved novel Z-FDTD method of analyzing the dispersion medium is proposed in the paper. It’s more efficiency and accuracy comparing to the traditional Z-FDTD method.In the new method the intermediate variable D may be omitted, Fourier transform was applied directly to the electric field E. Compared with the conventional Z-FDTD, it has some advantages, such as simple formula and programming, saving memory and computing time.And this method can be used to analyze the three-dimensional targets which covered inhomogeneous plasma.The results show that the choice of suitable thickness of the plasma can reduce target's bistatic RCS in order to achieve the stealth effect. The application of the improved algorithm saves computer memory and can also reduce the calculation time and improve efficiency.