We propose and demonstrate a new scheme for suppression of output distortion in an open-loop gyroscope employing an erbium-doped fiber amplifier/source (FAS). In addition to the main modulation for the rotation rate measurement, a small auxiliary modulation at a different frequency is used to extract an error signal, which is necessary for keeping the quasi-dc component of the feedback signal power at a constant level for varying rotation rate. By active tracking of the optimum modulation condition using this two-frequency modulation scheme, we obtain stable gyro output with suppressed distortion as well as stable FAS characteristics. We also calculate the distortion in the gyro response due to the feedback effect, from which we estimate the FAS gyro output distortion due to the residual ac feedback effect when the dc feedback effect is removed by the proposed scheme. The measured residual deviation agrees reasonably with the estimation.