An amplified closed-Sagnac loop interferometric fiber optic gyroscope (AC-I
FOG) has been proposed and demonstrated in our earlier work. This paper rep
orts the theoretical analysis of its operation. The analysis has been focus
ed on the effect of the erbium-doped fiber amplifier (EDFA) inserted within
the reentrant path. The analysis shows that the sensitivity can be improve
d by at least two orders of magnitude as compared to a conventional IFOG if
the EDFA is an ideal device, The simulated open-loop response coincides we
ll with that of the experimental data. Further analysis shows that the dete
ction limit is restricted by the beat noise that build ups rapidly in succe
ssive circulations. The rate of noise build-up depends greatly on the optic
al bandwidth of the closed-Sagnac loop.