TERCOM(TERrain COntour Matching), which is the one of the Terrain Referenced Navigation and used in the cruise missile navigation system, is still under development. In this study, the TERCOM based on area-based matching algorithm and extended Kalman filter is analysed through simulation. In area-based matching, the mean square difference (MSD) and cross-correlation matching algorithms are applied. The simulation supposes that the barometric altimeter, radar altimeter and SRTM DTM loaded on board. Also, it navigates along the square track for 545 seconds with the velocity of 1000km per hour. The MSD and cross-correlation matching algorithms show the standard deviation of position error of 99.6m and 34.3m, respectively. The correlation matching algorithm is appeared to be less sensitive than the MSD algorithm to the topographic undulation and the position accuracy of the both algorithms is extremely depends on the terrain. Therefore, it is necessary to develop an algorithm that is more sensitive to less terrain undulation for reliable terrain referenced navigation. Furthermore, studies on the determination of proper matching window size in long-term flight and the determination of the best terrain database resolution needed by the flight velocity and area should be conducted.