Since the paper published in The Leading Edge (No. 1 issue of 2006 ) described in detail the theory, equipments and outdoor test results of magnetic gradient tensor, this technology has become one of the hot topics of magnetic prospecting methods. This paper describes the concepts and advantages of the magnetic gradient tensor. Both frequency and spatial domain methods are used to transfer borehole three-component magnetic data to magnetic gradient tensor. According to the joint inversion principle and Euler deconvolution, the joint inversion equations for magnetic gradient tensor are deduced, which enable us to flexibly inverse one or more components based on a weighted function matrix, and the technology is more common than the method mentioned in Reference [14]. The simulated results of synthetic models reveal that the magnetic gradient tensor inversion method can be accurately employed to locate the magnetic body according to borehole bottom anomalies. Concerning 3D models, only one borehole magnetic data can calculate the locations accurately. Moreover, the method was applied to interpreting the three-component magnetic data of No.18-2 drill in Daye iron mining area, Hubei province, and the results indicate that the deconvolution solutions of magnetic gradient tensor are concentrated on the 100 to 180 m and 500 to 550 m elevations that are in accordance with the drilling results. The result confirms the geological inference that there are two steps of iron ore bodies, which has practical significance in search for ore bodies at deeper locations in Daye iron mining area.