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The precise indoor tracking system using Xbee signal strength protocol has become a potential research to the WSN applications. The main aspects for the success tracking system is accuracy performance based on location estimation. The improvement of location estimation is complicated issue, especially using RSSI with low accuracy due to the signal attenuation from multipath effect at indoor propagation. Hence, many existing research typically focused on specific methods for providing improvement schemes at tracking system area. Then, we propose hybrid filter schemes, including extended gradient filter (EGF) for filtering noise signal based distance modification, and modified extended Kalman filter (MIEKF) will be combined with trilateration for filtering the error position estimation. Using mobile cooperative tracking scenario refers to our previous work, the proposed hybrid filter scheme which is called modified iterated extended gradient Kalman filter (MIEGKF) can optimize the error estimation around 41.28% reduction with 0.63 meters MSE (mean square error) value. [ABSTRACT FROM AUTHOR]