In this paper, an improved direct extraction method to extract the model parameters in InP heterojunction bipolar transistor （HBT） small-signal equivalent circuit is presented and successfully applied to small-signal equivalent circuit of InP HBT. The distributed base-collector capacitance effect is taken into consideration in the adopted model. The extracting process of this method, which extracts parameters in turn from the peripheral parasitic elements to the intrinsic internal elements, is clearer than other direct extraction methods. Except for the parasitic parameters, all other parameters are calculated without any simplified approximation. This method relies on S parameters measurement. All of the equivalent circuit parameters are extracted directly from the S parameters without using approximations based on initial values. The direct extraction method is successfully validated on InP HBT in the frequency range of 0.1 ~ 40 GHz, and excellent agreement is achieved between the measured and calculated S parameters over the whole frequency range.