Taiji-1 is the first step of China’s efforts on the detection of gravitational waves in space. It is a one-year quick mission, which aims to verify the key technologies on orbit. The detection of gravitational waves at mHz frequency band needs to exceptionally focus on small spatial deviations between two inertial references several million kilometers apart. The inertial reference on Taiji-1 spacecraft (S/C) has been developed based on a capacitive readout and actuation scheme to meet the requirements of accelerometer. In this paper, the development condition, ground tests and on-orbit performance of this inertial reference are described.