Abstract: The high-precision magnetic azimuth of directional wells requires the accurate calculation of azimuth measurement errors and analysis of error sources. In this study, the finite element analysis (FEA) software was used to simulate the change in the interference magnetic field generated by the drill tool in the geomagnetic field. The measured azimuth error was obtained through the triaxial magnetic induction intensity inside the drill pipe and was compared with the real azimuth of the drill pipe to get the azimuth error. Then, the variation laws of azimuth errors was observed and analyzed by controlling factors including the azimuth of the drill pipe, deviation angles, bottom hole assembly (BHA), non-magnetic drill collar length, and the size and direction of the external magnetic field. The simulation test showed that the azimuth error was the smallest in the north-south direction and the largest in the east-west direction of the drill pipe, and it increased with the rise in the deviation angles, which presented a sinusoidal variation law. Longitude and latitude would also affect the change in azimuth, and the azimuth error grew with the increase in dimensions in general and mainly depended on the local total magnetic field and magnetic inclination. The research results indicate that the azimuth error closely correlates with the inclinometer data, BHA, longitude, latitude, and the non-magnetic drill collar length, and it can be accurately estimated by finite element simulation under different conditions and then be corrected accordingly. The simulations can provide a reference and theoretical basis for the selection of the non-magnetic drill collar and BHA, and the correction of azimuth errors in engineering applications.