The second-order analysis approach for the cycle of Stirling engine is amended on the basis of mechanical loss and the temperature check of heater and radiator. Stirling engine is taken as the object, the alternating flow and heat exchange process of GPU-3 Stirling engine is simulated, and the changing rules of its internal pressure, temperature, velocity, power and efficiency are obtained. The simulation results are identical to the test results of NASA. The amended second-order analysis approach is used to analyze the effect of engine’s rotating speed, working substance and average pressure on the engine’s output performance. The error of the amended approach is less than 20%. The approach may be useful for the optimization design and the characteristic analysis of Stirling engine.