Oxygenation wrench is the essential equipment for environmental control and life support subsystem of spacecraft. In order to optimize the ergonomic performance in the installation process of the oxygenation wrench, an analytical method for system improvement based on simulation technology is proposed. Firstly, the models of return module and oxygenation wrench are built, and the whole installation process simulated in JACK. Then, ergonomic factors of manual assembly, including reachability, visibility, operation space and comfort, are assessed based on the examination and analysis of primary ergonomic concerns such as collisions between people, tools and return module wall, visibility and human stress, which are quantified and retrieved from the simulation result. Finally, both ergonomics-oriented and assembly-process-oriented recommendations for the optimization of oxygenation wrench installation are proposed based on previous assessment and analysis. Based on experimental verifications, this method is capable of identifying the ergonomic flaws and problems, which can be optimized in manual assembly processes, leading to a 28% reduction of the body′s stress and significant improvement on visibility and assembly precision.