Typically, inertial navigation systems assume the gravity field to be normal (ellipsoidal), meaning that the deflections of the vertical (DOV) are ignored in the gravity compensation procedure. This is one of the primary error sources in inertial navigation, especially detrimental in the stand-alone mode. Errors due to gravity field and system noise grow rather fast in the vertical channel, which normally requires some external aid (such as GPS or barometric altimeter), while the horizontal error growth is much slower and bound within the Schuler period. In this paper we present some preliminary results of testing GPS/INS navigation, supported by accurate external DOV information. The principal objective of our investigation is to determine to what extent accurate gravity data can improve georeferencing of airborne and land platforms, and how this accuracy propagates to a digital imaging sensor error model. The two primary interests addressed in this paper are: (1) the effect of accurate gravity information on the inertial sensor error estimation, and (2) the accuracy of stand-alone inertial navigation during a GPS outage with the DOV compensation. The high accuracy navigation grade LN 100 INS was tested in stand-alone mode and tightly integrated with dual frequency GPS data. The DOV compensation was performed using the unclassified 3D 2′×2′ NGA (National Geospatial-Intelligence Agency) DOV grid, and tests comparing the navigation and calibration results with and without accurate gravity compensation under varying navigation conditions were analyzed. Due to the limited scope of this paper, only a sample of the airborne test results is presented, with a main focus on the land-based test results.