The performance of tau-dither loop (TDL) is evaluated for a direct-sequence spread-spectrum system in a multipath fading channel. The multipath fading channel is modeled as a two-ray rayleight fading channel. The code tracking perfomrance of TDL is analyzed in terms of tracking jitter and mean-tiem-to-lose-lick (MTLL). The tracking jitter performance is degraded while MTLL perfomrance is improved with increasing discriminator offset and decreasing power ratio of main to second paths. It is shown that for a large bit SNR, the effect of multipath fading becomes more significant. And it is also shown that tracking jitter and MTLL performance is less sensitive to delay spacing and discriminator offset for a small bit SNR than for a large bit SNR.