The indoor moving target localization based on the received signal strength indicator is studied in this paper. By introducing filtering algorithms, a novel dynamic parameters setmembership filtering (DPSMF) is proposed to reduce the interference of the multipath effect and noises. First, the higher-order remainder is included in the bounded range based on the interval mathematics method to improve the linearization accuracy of the Taylor series expansion of the measurement function. Second, the parameters to be determined in the channel model are set to local dynamic parameters, which are obtained by solving a particular semi-definite programming problem. Third, the optimized localization estimations of the target node at each sampling instant and the ellipsoid set containing the real state of the system are obtained based on the DPSMF. Finally, an example is given to verify the effectiveness of the proposed DPSMF algorithm.