Abstract: This paper studied and discussed the marketing regulation system of sheep farming and spinning wool production by the System Dynamics with Grey System Method .In terms of dynamic analogue , author studied the marketing system of structure under the condition of plan-economy with commodity economy , and any economic policy has an effect on supply-requirement of spinning products , consuming structure , developing speed, scale and structure of production , By means of the system simulation , presenting measures for soluting difficulty that faces the sheep farming and spinning wool production now and suggestion on policy in close relationship with developing sheep farming and spinning wool production.