To reduce the pressure shock and oscillation phenomena caused by the hydraulic system in the steering process, and to improve the stability of the steering system, this paper proposes an optimized structure of redirector with by-pass damping. The mathematical model of steering system is established to analyze the influence of load sensing characteristics and by-pass damping on steering stability. The co-simulation model of loader dynamics and hydraulic steering system is established. The accuracy of the simulation model was verified by the test system. The simulation results of the two steering system models with and without by-pass damping are compared. The results show that，compared with the simulation results of the original steering structure, the steering system with the by-pass damper ensures good load sensing characteristics and stability of the system, weakens the peak pressure shock and reduces the pressure oscillation of the hydraulic system.