Abstract: Aiming at a space-earth communication system with complex packet service, we propose a new packet channel multiplexing algorithm to solve the problems of high processing delay, high packet loss rate, and low system throughput of traditional packet channel multiplexing with the traditional algorithms. In the new algorithm, the packet channel multiplexing time is dynamically selected based on packet arriving velocity, packet field length, and allowed time delay. Then the time reference threshold of the new packet channel multiplexing algorithm is given and the algorithm is simulated. The results show that the new algorithm can ensure high packet channel multiplexing efficiency, depress packet channel multiplexing delay, increase transmission velocity of effective data, and improve system throughput.