The performance of a cellular location system based on received signal strength difference (RSSD) is investigated. In the cellular location system, each mobile station needs to measure the signal strength transmitted by surrounding base stations, and sends its measurements to the service base station. Using the strength differonce between the service base station and neighboring base stations, the position of a mobile station is estimated. The related Cramer-Rao lower bound (CRLB) on the location error of this method was derived, and numerical simulations are made to discuss the influences of the number of base stations, correlation coefficient of shadowing attenuation, and cell radius on CRLB. The results show that the CRLB is positively correlated with the standard deviation of shadowing attenuation and cell radius, but negatively correlated with the number of base stations and the correlation coefficient of shadowing attenuation. In addition, the CRLB results obtained in this paper were compared with those of the cellular location system based on received signal strength (RSS) measurements, which reveals that the former is more fight.