Abstract: Magnetic-valve controlled reactor (MCR) is a reactive compensation device in power system, and its capacity is regulated through changing the saturation of iron core. In order to accurately analyze the core saturation of MCR in real time for optimizing the output control of MCR and guaranteeing the safe and reliable operation of magnetic valves, a mathematical model of MCR is established based on Jiles-Atherton (J-A) inverse model and the effects of different state variables on the output characteristics of MCR are compared and analyzed with the electromagnetic computing program. The results show that the DC excitation current of the excitation branch presents linear relationship with the saturation degree. Therefore the DC excitation current can be used as an index for core saturation observation and analysis. The reached conclusions are helpful for realizing the on-line monitoring of the MCR core saturation and the operating state of excitation branch, and for optimizing the control of the output reactive power of MCR.