The detection of presence of decoy in terminal guidance is not only the prerequisite of countering against Towed radar active decoy (TRAD) jamming but also an important factor to decide the hit precision of missile. TRAD jamming makes the actual target and the spurious decoy unresolved within the radar beam of homing seeker, and in this case the detection and measure processing with conventional approach fails. This paper analyzes the distinction of echo fluctuation characteristic when the decoy is present or not, and the conditioned probability density functions of measured amplitude and observed Signal-to-noise-ratio (SNR) of echoes are abstracted and developed. Then the Generalized maximum likelihood detection (GMLD) algorithm based on these characteristics of radar echoes is proposed and a practical detection flow for TRAD in terminal guidance is developed. Simulation results with typical condition and dynamic jamming course illustrate the performance and application of the algorithm.