A self calibrating zero compensation circuit for a fluxgate compass comprising a toroidal core; a drive winding coupled to said core, and at least one and preferably two secondary sensing windings coupled to said core comprises a continuously operating demodulator coupled to the sensing windings and an intermittently operated drive signal fed to the drive winding. A microprocessor is coupled to the demodulator output through an analog to digital converter. The microprocessor provides alternatingly to the drive winding a drive signal for a first period of time and prevents transmission of the drive signal for a second, preferably equal period of time. During the second period of time, the sensing windings and the demodulator provide an output signal to said microprocessor representing the zero signal reference. The demodulator output during the first period of time represents the magnetic field signal from the compass. The output signal during the second period of time is used by the microprocessor as a zero reference or base for processing the demodulated output signal during the first period of time to self correct for drift and internal changes within the compass sensor over time.