This work deals with dynamic analysis of a monorail system with magnetic caterpillar where magnets are embedded inside each articulated element of the caterpillar, augmenting traction force of main rubber wheels to climb up slope up to 15 degree grade. Considerations are first given to determine stiffness of the primary and secondary suspension springs in order for the natural frequencies of car body and bogie associated with vertical, pitch, roll and yaw motion to be within generally accepted range of 1-2 Hz. Equations for calculating magnetic force needed to climb up given slope are derived, and a magnetic caterpillar system for 1/6 scale monorail is designed based on the derivation. To assess the hill climbing ability and cornering stability, and make sure smooth operation of the side and vertical guiding wheels which is critical for safety, a multibody model that takes into account of every component level design characteristics of car, bogie, and caterpillar is set up. Through hill climbing simulation and comparison with measurement of the limit slope, the validity of the analysis and design of the magnetic caterpillar system are demonstrated. Also by studying the curving behavior, maximum curving speed without rollover, functioning of lateral motion constraint system, the effects of geometry of guiding rails are studied.