Image navigation is a primary process for on-orbit optical payloads involving environmental disaster monitoring, meteorological observation, and the positioning and tracking of space-aeronautics targets. However, because they are affected by solar illumination and orbital heat flux, as well as shock and vibration during launch, the installation structures between the instruments and satellite platform, especially for geostationary satellites, will inevitably generate a displacement resulting in the reduction of positioning accuracy. During the application of FengYun-4A (FY-4A), it is found that the further away from the subsatellite point, the greater the positioning error of Advanced Geostationary Radiation Imager (AGRI) on FY-4A will be. The positioning error can reach 14 pixels at the Arabian Peninsula in operational images. In addition, compared with orbital and attitude measurement errors, long-term observations show that the installation matrix is likely to be the most significant factor determining the navigation accuracy of AGRI. Therefore, an on-orbit installation matrix calibration approach as well as a high-precision navigation algorithm is proposed to modify the positioning error of AGRI. Experimental results show that the navigation error of the processed images corrected by the proposed method can be reduced to 1.3 pixels, which greatly improves the navigation procession of AGRI. In general, this method could be a supplement to the correction of positioning error for geostationary payloads.