In this paper, we propose an AGC (Automatic Gain Control) algorithm for initial cell search in 3GPP (3rd Generation Partnership Project) LTE (Long Term Evolution) TDD (Time Division Duplex) system. Since the received signal has a large signal power difference between uplink and downlink subframe in wireless communication systems using a TDD scheme, conventional AGC scheme cannot sufficiently adjust the AGC gain because the AGC gain cannot converge fast enough to properly respond. Therefore, conventional AGC scheme leads to increased AGC gain variation, and the received signal will be attenuated by large AGC gain variation. To overcome this limitation, we propose an AGC scheme based on the average amplitude ratio calculation which can not only effectively increase convergence speed of the AGC gain but also maintain the stability of AGC operation in LTE TDD system. Also, it is important for AGC to converge efficiently for the accurate radio frame timing detection during the subsequent initial cell search procedure. Therefore, we also consider the proposed AGC scheme in combination with PSS (Primary Synchronization Signal) detection interface for the first step of initial cell search process in LTE TDD system to obtain both a stable AGC operation and accurate PSS detection performance. By extensive computer simulation in the presence of frequency offset and various channel environments, we verified that the proposed method can obtain a good behavior in terms of demodulation and PSS detection performance in LTE TDD system.