The mathematical model of 2D digital valve was established and its hysteresis characteristics was first simulated and analyzed. In order to diminish and even eliminate hysteresis, a dither compensation technology which used high frequency dither signal to superimpose on input signal was proposed. Then the special test rig was built and experimental study was carried out. The experimental results revealed that when dither amplitude was 25%, 50% and 100% of backlash magnitude respectively, the hysteresis width accordingly reduced from 2.2% to about 1.7%, 11% and 0.5% of backlash magnitude respectively. It is finally concluded that the proposed dither compensation approach can diminish and even eliminate hysteresis of 2D digital valve effectively.