The present invention discloses a time delay estimation method based on cross-ambiguity function and waveform similarity comparison combination. The method mainly solves the problem that narrowband signals having frequency offset cannot be accurately estimated in the prior art. The implementation scheme comprises: 1, obtaining two receiving signals; 2, setting a time domain search parameter; 3, performing frequency compensation of the receiving signals, and calculating correlation sequences; 4, employing the correlation sequences to calculate similar coefficient sequences; 5, determining whether a time domain search range satisfies a time domain termination condition or not, if the time domain search range satisfies the time domain termination condition, executing the next step, or else, returning back to the step 4 after regulation; 6, determining the step number of frequency compensation satisfies a frequency compensation termination condition or not, if the step number of frequency compensation satisfies the frequency compensation termination condition, executing the next step, or else, returning back to the step 3 after the step number adds 1; and 7, searching similar coefficient sequences to obtain sampling numbers of time delay estimation so as to obtain signal time delay. In the environment having frequency offset, root-mean-square errors are reduced, the accuracy of once estimation is improved, and the time delay estimation method based on cross-ambiguity function and waveform similarity comparison combination can be used for location measurement service of the narrowband signals.