Recent development in seeker technology explores a new seeker design in which, with larger field-of-view (FOV), optical parts are strapped down to a body (hence, called as a body-fixed seeker or a strapdown seeker). This design has several advantages such as comparatively easier maintenance and calibration by removing complex mechanical moving parts, increasing reliability, and cost savings. On the other hand, the strapdown seeker involves difficulties in implementing guidance laws since it does not directly provide inertial LOS rates. Instead, information for generating guidance commands should be extracted by estimating missile/target relative motion utilizing target images on the image plane of a strapdown seeker. In this research, a new framework based on an unscented Kalman filter is developed for estimating missile/target relative motion on the simplified assumption of a point source target. Performance of a terminal guidance algorithm, in which guidance command is generated based on the estimated relative motion, is demonstrated by a missile/target engagement simulation.