Due to the force measurement delay (FMD) in the system, the HIL contact simulation becomes divergent. Traditional first-order phase lead compensation approach still results in a small divergence for the pure time delay. The serial Smith predictor and phase lead compensation approach leads to an over-compensation and an obvious convergence. In this chapter, a hybrid Smith predictor and phase lead compensation approach is proposed. The hybrid Smith predictor and phase lead compensation can achieve a higher simulation fidelity with a little convergence. The phase angle of the compensator is analyzed and the stability condition of the HIL simulation system is given. The effectiveness of the proposed compensation approach is tested by simulations on an undamped elastic contact process.